Suppose EBV is considering a $5M Series A investment in Newco. EBV proposes to structure the investment as 5M shares of CP. The employees of Newco have claims on 15M shares of common stock. Following the Series A investment, Newco will have 15M common shares outstanding, with another 5M shares on conversion of the Series A.

(a) Compute the LP cost for this investment.

(b) Solve for the LP valuation equation for this investment.

(c) Suppose that total valuation is $30M. What is the LP valuation?

(d) Find the breakeven valuation for the investment under base-case assumptions.

(e) Perform a sensitivity analysis for this breakeven valuation.