A VC  invests  $4M into  a  firm in  which  the entrepreneur has  5M  shares of common.   The VC receives in exchange 6M shares of CP at $0.5 per share. Assume that rf=5%, that the exit time is 3 years and that the volatility of the investment is σ=60%. 

1. Find the implied firm value offered by the VC.
2. Would the implied firm value be larger if:
   1. The exit time is longer (say 4 years)
   2. The volatility of the investment is higher (say 75%)?  Explain why.