A start-up firm has a goal to go public through an IPO in 5 years. With the help of 2 stages of Venture Capital investments, management expects the firm to go public with a market equity value of $500 million. Currently (think of now as "time zero") the founder of the company is the only investor. She put up $8 million in return for 500,000 shares of common stock. Management believes it will need a Stage 1 Venture Capital investment of $50 million at the end of year 2, in return for common shares; and a Stage 2 Venture Capital Investment of $120 million at the end of year 4 , also in return for common shares. Both Venture Capital firms require a 60% annually compounded return on their investments. a. How many common shares will be issued to each of the Stage 1 and Stage 2 Venture Capital firms? b. What is the expected annually compounded rate of return earned by the founder? [Use (ValueofFounderssharesatyear0ValueofFounderssharesattheendofyear5)511.] A start-up firm has a goal to go public through an IPO in 5 years. With the help of 2 stages of Venture Capital investments, management expects the firm to go public with a market equity value of $500 million. Currently (think of now as "time zero") the founder of the company is the only investor. She put up $8 million in return for 500,000 shares of common stock. Management believes it will need a Stage 1 Venture Capital investment of $50 million at the end of year 2, in return for common shares; and a Stage 2 Venture Capital Investment of $120 million at the end of year 4 , also in return for common shares. Both Venture Capital firms require a 60% annually compounded return on their investments. a. How many common shares will be issued to each of the Stage 1 and Stage 2 Venture Capital firms? b. What is the expected annually compounded rate of return earned by the founder? [Use (ValueofFounderssharesatyear0ValueofFounderssharesattheendofyear5)511.]