You are a venture capitalist and have been approached by XYZ Electronics, a private firm. The firm has no debt outstanding and does not have earnings now but is expected to be earning S15 million in four years, when you also expect it to go public. The average price earnings ratio of other firms in this business 50,

Estimate the exit value of XYZ Electronics.

) If your target rate of return is 35 percent, estimate the discounted terminal value of Cirrus Electronics

() If you are contributing $75 million of venture capital to Cirrus Electronics, at a minimum what percentage of the firm value would you demand (9)

o in return (ownership)?