A VC firm wants to invest $4.0 million in Making Stuff Corp., a startup firm. Making stuff is expected to go public in 4 years. Earnings are not projected until year 4, and are projected to be $3 million in year 4. Comparable firms are trading at P/E ratios of 20x. Making Money has 2.5 million shares of stock outstanding. The VC firm has a required rate of return of 40%.

1 Calc the post - money valuation (today). (answer in whole $. Do not round to millions.) Calc the PV of the terminal value (at exit) at the required rate of return.

2 What is the VC % ownership at exit? (calc as % and round to 1 decimal)

3 What is the Pre-money Valuation? (answer in whole numbers. do not round to millions) Pre-money = post-money - investment

4 What is the implied current price/share? (round to 2 decimals) Share price = pre-money valuation / current shares outstanding

5 How many new shares will be issued? (answer in whole numbers. do not round to millions) new %/existing % * current shares