1.Assume that Valhalla decides to make the investment: What valuation do you think is appropriate at an assumed discount rate of 50%? What would be Valhalla's expected IRR from the investment at a $5 million pre-money valuation? What would be Valhalla's expected IRR from the investment at a $10 million pre-valuation. Remember to specify justifications for any assumptions that you use in your calculations (such as any expected series B rounds).

Valhalla Ownership 25% Total Valhalla Investment $ 3,750,000 Post-Discount Company's Model Exit Company Exit Valhalla Multiple Valuation 40% Discount 20% Discount Valhalla Multiple Multiple (No Discount) 2007 Revenue 84,700,000 2.0 169,400,000 $ 101,640,000 $ 135,520,000 6.8 - 9.0 11.3 EA EA 2007 Net Income (After-Tax) 9,834,000 23.0 226,182,000 $ 135,709,200 $ 180,945,600 9.0 - 12.1 15.1 Post-Discount Valhalla's Model (Conservative Scenario) Exit Valhalla Company Exit Multiple Valuation 40% Discount 20% Discount Valhalla Multiple Multiple (No Discount) 2007 Revenue 57,480,000 2.0 114,960,000 $ 68,976,000 $ 91,968,000 4.6 - 6.1 7.7 EA to 2007 Net Income (After-Tax) 3,999,600 23.0 91,990,800 55, 194,480 $ 73,592,640 3.7 4.9 6.1