An investor is considering investing $2 million in exchange for 25% of the common stock of Company X. They expect the company can be sold in 5 years at a 40 million valuation. The WACC of mature companies with similar risk characteristics is 10% and the typical discount for lack of liquidity is 30%.

1. What is the Pre-Money Valuation of Company X?
2. Whats the implied probability of Company X, to become a mature privately held (and hence illiquid) firm? Assume that the liquidation cash flow in the case of failure is 1 million.