Question 5 (25 points) Assume target rate of return of 50%, and 5 year exit equity value of $100 million for a company with 200,000 existing shares outstanding. Your firm would like to make a $5 million investment in a Series A round.

Please answer the following:

a. What is the required ownership stake of your firm in the investment?

b. What is the post money valuation?

c. What are the new shares issued?

d. What is the post money price per share?

e. If your original $5 million investment included a full ratchet anti-dilution provision and a subsequent $2.5 million Series B round financing occurs at $30 / share, what would your pro forma ownership percentage be?