A private equity (PE) firm just closed a deal with a privately held company BBB. The PE firm would pat $15 million cash to completely buy out a BBB company's co-owner, who holds 25% ownership of BBB before the buyout. According to the PE firm's forecast, company BBB will create the following free cash flows to all its owners in the next four years.

Year 1: $5 mill; Year 2: $6 mill; Year 3: $8mill; Year 4: $8mi

The PE firm also thinks the market value of company BBB's total equity at the end of the fourth year will be $92 million.

1) Company BBB's total equity valuation today implied by the buyout transaction is ____.

a) $15 million

b) $20 million

c) $60 million

d) $92 million

2) The PE firm's expected annual rate of return over the next four years on the $15 million investment is ______.

a) 16.95%

b) 18.48%

c) 20.66%

d) 82%