$1.$ Using the information below, please answer the following questions about

XOXO, a startup company. In your analysis, assume the valuation date is the end

of year $5,$ projected earnings will in year $5$ will be $$20$ million, and an appropriate

price$-$to$-$earnings ratio for valuing these earnings is $15$ times $(7$ points$)$

Financing Round Amount in $ millions Year Required Return

$1$ $ $7050\%$

$2$ $ $3335\%$

In addition, the company wants to reserve $20$ percent of the shares outstanding

at time $5$ for employee options.

a$)$ What percentage ownership at time $0$ should round$-$one investors demand

for their $$7$ million investment?

b$)$ If XOXO presently has one million shares outstanding, how many shares

should round$-$one investors demand at time $0?$

c$)$ What is the implied price per share of XOXO stock at time $0?$

d$)$ What would be the post$-$money valuation at the closing of the first round?