4 ms·
That's actually not a bad return on investment (7.5% yearly)
by eanzenberg 8y ago
That's actually not a bad return on investment (7.5% yearly)
- Aeolun 8y agoAnd it doesn’t stop there. The money certainly isn’t vaporized as with a failed business.
- inuhj 8y agoIt's not a good return on investment because the underlying asset hasn't appreciated 7.5%/yr some 8 years later. I am not a valuation expert but as a small business I'd estimate a 3x EBITDA placing the valuation at 2.34MM. The investors presumably owned a fraction of that.
- jeremyjh 8y agoRisk adjusted its a pretty poor return. Also you are completely ignoring the time value of money.
- nostrademons 8y agoThere's a time value on that money. If you'd put $10M into an S&P 500 index fund in 2011, it'd be worth about $22M now, which first of all is a fair bit more than 7.5% and secondly is the denominator you're looking for to figure out percentage returns on capital now. The company wasn't making $780K/year in profit in 2011, it took 7 years to get there.
- eanzenberg 8y agoThat's timing though, historically I believe s&p yields 7% per year on average.