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Business, 05.05.2020 17:01 ashantajohnson6810

10) A biotech startup, if it survives, is expected to have an IPO in 5 years, which will value the company at $400 million. When valuing cash flows of comparable investments, VCs use a hurdle rate of 50%. The beta of this company is 2. If the risk free rate is 6% and the market risk premium is 7%, what is the probability of the firm’s survival?
A) 4.2%
B) 32.8%
C) 40.0%
D) 44.9%

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