A potential investor is seeking to invest $1,250,000 in a venture, which currently has 2,000,000 shares held by its founders, and is targeting a 40% return four (4) years from now. The venture is expected to produce $1,750,000 in income per year at year 4. It is known that a similar venture recently produced $1,750,000 in income and sold shares to the public for $17,500,000.

Suppose that the first round investor believes that the venture cannot reach the E4 projection without an additional $2,000,000 infusion at the end of year two (2) from a second round investor expecting a 25 percent compounded annual rate of return on the money contributed at that time. Assume that the first round investor cannot have his percentage share reduced in the transaction.

7) What ownership percentage of our firm must be sold in order to provide the second round investor with their targeted return? (round to 5 decimal places)

8) What is the founders remaining ownership share %? (round to 5 decimal places) 9) What is the total number of shares after the second round financing? (round up to whole shares)

10) What is the new number of shares for the first round investor? (round up to whole shares)

11) What is the new price per share for the first round investor? (round to 5 decimal places)