Investor Interest Sample Clauses

Investor Interest. 2.7 ITAR.............................................................

Investor Interest. According to our conservative estimates, the cumulative dividends that would be paid to the new investor, based on 29.06 percent of ownership, over the next five years, would be $187,618. Dividend payments to the investor would be made as follows: Year 1 $17,892 Year 2 27,091 Year 3 37,213 Year 4 48,613 Year 5 56,809 Totals $187,618 The other co-owners, ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇, will not take dividends over the next five years. The reasons for this decision are: a) they will receive employment compensation and benefits, and b) the undistributed dividends will increase the amount of retained earnings, as a strategy to strengthen the company's financial position for sustainable future growth, to increase the company's net worth, and subsequently the market value when it goes public. Key measures of the expected benefit from the investment include: Initial Cash Investment $29,500 Less Dividends Paid Year 1 17,892 Year 2 (42.85 % of $27,091) 11,608 Unrecovered Investment $0 Payback Period: 1.4285 years, or 1 year 5 months Net present value (NPV), which evaluates the capital investment by discounting at 16 percent its future cash flows to their present values, and substracting the initial investment of $29,500 from their sum of $187,618 is $83,778, computed as follows: Net Cash Inflows x Factor Values Year1 $17,892 x .862 $15,422 Year2 27,091 x .743 20,128 Year3 37,213 x .641 23,853 Year4 48,613 x .552 26,834 Year5 56,809 x .476 27,041 Total present value of cash inflows discounted at 16% $113,278 Less initial investment $29,500 NPV Net present value $83,778 Because the net present value is positive, the investment would achieve at least the minimum rate of return of 16 percent, and is expected to yield significant additional returns to the investor. Internal rate of return (IRR) of 87 percent is computed as follows: Year 1 Year 2 Year 3 Year 4 Year 5 Initial Investment ($29,500) Returns $17,892 $27,091 $37,213 $48,613 $56,809 IRR = 87% The level of 87 percent measures the estimated performance of the capital investment, and because it is higher than 16 percent minimum desirable return, it might be considered as adequate to the investment risk. Dividends per share, computed as follows: Year Common Stock Dividends / Common Shares Outstanding Dividends per share Year1 $61,698 / 10,150 shares $6.08 Year2 $93,418 / 10,150 shares 9.20 Year3 $128,324 / 10,150 shares 12.64 Year4 $167,634 / 10,150 shares 16.52 Year5 $195,895 / 10,150 shares 19.30 More information regarding...