Problem #2: (5 Points) During negotiations for a $750,000 Series A Preferred equity investment from an Angel Group, the lead Angel representing the Angel Group offers you either: 1) A Pre-Money Valuation of $1,125,000 with Series A Preferred Stock with an annual 10% dividend rate accruable (i.e. paid out of Exit proceeds) and a 1X Liquidation Preference, OR 2) A Pre-Money Valuation of $1,125,000 Series A Preferred Stock investment with an annual 0% dividend rate accruable (i.e. paid out of Exit proceeds) and a 1.5X Liquidation Preference Based "strictly" on these economics AND that you (i.e. the management team/Founders) are "extremely" confident that the Company can successfully be positioned for an attractive Exit in only three years or less, which investment offer would you accept and why? "Type-in" Selected Option in Blank (Specify either #1 or #2): Rationale for above decision: (Hint: The below optional template/format might be helpful in organizing/formatting your evaluation of the two Options. It is not a requirement to complete, but you may.) Option #1: 1X Series A Option #2: 1.5X Series A Preferred Preferred Pre-Money Valuation to to to Capital Investment % Post Money Valuation Forecasted Exit Value to to Less: Preference Amount* Less: Accrued Dividend Amt.* * Distributable Equity % Equity-Founders* * * Forecasted Exit Equity Value* * * * % Effective % Equity* * * * * %