Text Exercises $14\mathrm{.}1$

Use VCV tools. In the diagram show the values of $x-$axis and $y-$axis for all inflection points.

Suppose EBV is considering a $$5M$ Series A investment in Newco. EBV proposes to structure the investment as RP with an APP of $$4M$ plus $5M$ shares of common stock. $($We refer to this basket of RP plus common as "Series A$.")$ The employees of Newco have claims on $15M$ shares of common stock. Following the Series A investment, Newco will have $20$M common shares outstanding. Use VCV tools for questions $($c$)$ and $($d$).$

$($a$)$ Compute the LP cost for this investment.

$($b$)$ Solve for the LP valuation equation for this investment, i$.$e$.,$ write the exit equation.

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

$($d$)$ Find the breakeven valuation for the investment under base$-$case assumptions. $($Use VCV tools$)$