Question: Scaleit is a start-up specializing in mobile applications. The company's founders believe they can sell the company for $50 million in four years. They need

Scaleit is a start-up specializing in mobile applications. The company's founders believe they can sell the company for $50 million in four years. They need $7 million in capital now, and the founders wish to hold 1 million shares. The venture capital investor firm decides that, given the high risk of this company, a discount rate of 45% is appropriate. Use the NPV venture capital method, assuming a single financing round.

Calculate the ownership fraction of the venture capital company.

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