CREDIT) Note: You have to return the questionnaire after 0I0 1. A venture capita
ID: 3334367 • Letter: C
Question
CREDIT) Note: You have to return the questionnaire after 0I0 1. A venture capitalist funds typically funds 15% of the proposals he receive. In a stay by Harvard University, 50% of startups fail within five years and additional 20% within 10 years. a) What is the probability that a startup will be funded by this particular investor and b) What is the probability that a startup will not be funded but is successful in5 c) What is the probability that a startup gets funded by this investor and stll d) Comment on the attractiveness of investing in startups in this type of fail? (2 points) years? (2 points) successful after 10 years? (4 points) environment. (2 points) nncessing plant that supplies to a high-end restaurant, rnyired size. This week, the demand is for l the available 3500 pieces at a premium pri they are bound to pay aExplanation / Answer
Solution:
let us assume the total number of startups be 100
Then
The number of a startup for getting funded = 15
The number of a startup for not getting funded = 85
the number of startups failing within 5 years = 50
the number of failing within 10 years = 20
( a )
the probability that the startup will be funded = (15 / 100 ) * ( 50 / 100 + 20 / 100 )
= ( 15 / 100 ) * ( 70 / 100 )
= 21 / 200 = 0.105
( b )
The probability that the startup will not be funded but is successfull after 5 years = ( 1 - (15 / 100) * ( 1 - ( 50 / 100 ))
= ( 85 / 100 ) * ( 50 / 100)
= 17 / 40 = 0.425
( c )
The probability that the startup gets funded by this investor and still successfull after 10 years
= ( 15 / 100) * ( 1 - ( 70 / 100 ))
= ( 15 / 100) * ( 30 / 100)
= 9 / 200 = 0.045
( d )
The attractiveness of investing in startups in this type of environment depends on the innovation,long time vision,expandability,etc..
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