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Assume one of Marks cousins (Shelley) is, after all, able to help fund the business....

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Finance

Assume one of Marks cousins (Shelley) is, after all, able to help fund the business. She offers to buy Datahelp shares for 8,000, enabling the company to immediately repay the 8,000 loan. She will then hold 40% of the shares in the company

Required:

Using discounted cashflow techniques, calculate how long will it take Shelley to recover her investment?

Assume that:

  • She is assured of a genuine 40% share in dividends and capital growth
  • Her cost of capital is 2% per month

After June, cash receipts increase at 5% a month and cash payments increase at 2% a month

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