A VC is planning to invest $10 million in a startup with a pre-money valuation of $40 million. In exchange, the VC will receive newly issued (non-participating) convertible preferred shares with a 1.5x liquidation preference. Prior to the investment, the startup is 100% owned by its founders, who own 8 million common shares. The VC expects the following potential exits for the startup: IPO at $1 billion in 4 years, with probability 10%. Acquisition for $25 million in 4 years, with probability 40%. Failure (with the startup being valued at $0), with probability 50%. The startup will not need to raise any additional capital before the eventual exit. Calculate the following:

a) The number of convertible preferred shares that the VC will get, the % of stock ownership that these shares represent, and the price per share. ]

b) The VCs expected IRR.