1. Analog Computers needs to borrow $870,000 from the Midland Bank. The bank requires a 16% compensating balance. How much money will Analog need to borrow in order to end up with $870,000 spendable cash? (Round your answer to the nearest dollar amount.)
$1,600,800
$1,009,200
$1,035,714
$1,724,690
2. Suppose you are the founder of a VC-backed startup. One of the partners of the VC is proposing to stage the commitment of capital into your venture, as opposed to committing the entire amount of capital now. What is a good reason for you to accept?
1) Staging will give you the right to abandon the startup as new information arrives
2) Later stage valuations lead to less dilution of equity
3) Both the above statements are true