On June 30, 2017 Techco and Cashco entered into a joint venture (JV). Techco agreed to provide intellectual property in exchange for 40% of the equity of the JV. Cashco agreed to invest $75 million initially and then to add $50 million on the anniversary of the agreement each year for 4 years in exchange for 60% of the equity of the JV. Cashco also received the right to cease payments at any time in exchange for forfeiting its ownership in the JV.
This report calculates the fair value of Techco's share of the equity as of June 30, 2017 and the value of Cashco's forfeiture options.