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10-4 VC VALUATION AND DEAL STRUCTURING Chariot.com needs $500,000 in venture capital to bring a...

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10-4 VC VALUATION AND DEAL STRUCTURING Chariot.com needs $500,000 in venture capital to bring a new Internet messaging service to market. The firm's management has approached Route 128 Ventures, a venture capital firm located in the high-tech startup mecca known as Route 128 in Boston, Massachusetts, which has expressed an interest in the investment opportunity. Chariot.com's management made the following EBITDA forecasts for the firm, spanning the next five years: Year EBITDA $175,000 75,000 300,000 650,000 1,050,000 4 Route 128 Ventures believes that the firm will sell for six times EBITDA in the fifth year of its operations and that the firm wil have $1.2 million in debt at that time, including $1 million in interest-bearing debt. Finally, Chariot.com's management antici- pates having a $200,000 cash balance in five years. The venture capitalist is considering three ways of structuring the financing

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