If venture investors invest $6,750,000 now,will receive 32% of the exit value,and expect a 22% compounded rate of return on their investment,what is the exit value at the end of seven years?

Question

Quizplus · Accepted Answer

Using the formula for compound interest: 
FV = PV * (1 + r)^n, where
PV = Present Value = $6,750,000
r = expected rate of return = 22%
n = number of years = 7
FV = Exit Value

FV = $6,750,000 * (1 + 0.22)^7 = $84,854,057

Then, 32% of the exit value is:

Exit Value * 32% = $84,854,057 * 0.32 = $27,153,298

Therefore, the answer is D: $84,854,057 exit value at the end of seven years.

If Venture Investors Invest $6,750,000 Now,will Receive 32% of the Exit