Washington Capital Is Conducting Its Due Diligence to Determine What

question 53

Multiple Choice

Washington Capital is conducting its due diligence to determine what ownership fraction it would require in order to provide $18.5 million in venture capital to a small healthcare firm for a four-year period. Washington Capital has a 46% required return and expects the value of the underlying firm to reach $150 million within the next four years. What ownership fraction would Washington Capital require?

• A)56%
• B)63%
• C)72%
• D)85%
• E)96%

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Definitions:

Proximal Stimulus

The energies from the outside world that directly reach our sense organs.

British Empiricism

A philosophical viewpoint that emphasizes the role of sensory experience in the formation of ideas, stating that knowledge comes only or primarily from sensory experience.

Tabula Rasa

A theory suggesting that individuals are born without built-in mental content, and all knowledge comes from experience or perception.

Innate

Something that is present from birth, not learned or acquired through experience.