Arrow Precision Systems Inc (APS) is a privately owned defence contractor to the US military. APS is currently seeking venture funding to develop and test its advanced air-to-air missile system. Your fund, Defence Venture Partners, is presented with the funding proposal, summarised as follows. APS requires $2 million of total equity funding in its next round of financing. APS currently has revenue of $3 million, but because it is still in in its expansion phase, it has a negative earnings before interest, tax, depreciation and amortization is (EBITDA) of -$560.000 APS's current (pre-funding) balance sheet information is as follows: Assets = $5 million, Liabilities \Debt = $2.6 million, and Equity = $2.4 million APS's current (pre-funding) number of shares is 200,000 shares As an investment analyst for Defence Venture Partners, you are asked to provide a fair valuation of APS shares using two methods, multiples and the NPV/DCF method: Comparable firms: after extensive research, you manage to identify Eagle Advanced Targeting Inc (EAT). a NASDAQ listed firm and a US Navy air-to-air missile contractor, as the closest comparable. EAT's accounting information is as follows: Assets = $7 million, Liabilities\Debt = $3 million, Equity = $4 million, Cash = $1million, Revenue = $1.5 million, and EBITDA = $800,000. EAT currently has 1 million shares on issue. The stock is currently trading at $15. Among many financial multiples, your fund prefers ONLY the following: (1) EV/ Revenue (2) EV/EBITDA. Also assume that your fund applies a standard liquidity discount factor of 25%. NPV/DCF: an external investment advisor also places a value on the company, after extensive due diligence of $40 million. This reflects the present value of all forecasted future CFs, incorporating all the required CAPEX and taking into account appropriate adjustments for bankruptcy and liquidity costs. 1. Using your fund's guidelines, calculate the enterprise value of APS using the comparables method? 2. Given the enterprise value you calculated above what is the fotal percentage ownership that your fund will demand for providing APS with its required equity funding? 3. At what the share price will your fund invest? 4. How many new shares will be issued as a result of the investment? 5. Now, using the enterprise value derived from the NPV method, calculate the the total percentage ownership that your fund will demand for providing APS with all of its equity funding requirements? 6. What is the share price at which your fund will invest under the NPV valuation? Please answer to two decimal places (e.g. for $20.549 you should enter 20.55)