Allen and Nicole founded a new real estate venture last year with $$100,000$ in equity capital for which they received $3,000,000$ shares of common stock. The startup needs an additional $$2,000,000$ to carry out the founders$$ optimistic business plan.

A venture capitalist, who expects a $40\%$ compound annual rate of return, and the founders agree that the horizon $($time to exit$)$ for the investment should be $5$ years. The successful venture is expected to produce $$4,000,000$ per year in income at that time.

A comparable venture recently sold shares to the public for $$50,000,000,$ and that its last year of income was $$10,000,000.$

Using the information provided above, answer the following:

a$.$ Calculate the P$/$E at year $5.$

b$.$ Calculate the present value of the venture.

c$.$ Calculate the issue share price.

d$.$ Calculate the present pre$-$money and the post$-$money values.

After a more careful consideration, the first$-$round venture capitalist is suggesting that he doesn$$t really buy the original business plan$$s optimism, having spent only as much as that plan allowed.

He considers that yet another $$1,500,000$ investment is needed to get to that same exit value, $3$

years from now.

The first and second$-$round investors will pay share prices that allow $20\%$ expected returns,

answer the following questions:

a$.$ Calculate the acquired percent of the same exit value for the second$-$round investor.

b$.$ What parentage of the ownership is remaining to the founders?

c$.$ What is the total number of shares after the two rounds of financing?

d$.$ How many shares will be hold respectively by the founders, the first$-$round investor and the

second$-$round investor?

e$.$ Calculate the pre$-$money and the post money value during the second round