Answer the following questions: a. Corporations generally have less than 60% debt while property investments can be financed with up to 90% debt. Provide an explanation for this difference using the tradeoff theory. (3 marks) b. Starware Software was founded last year to develop software for gaming applications. Initially, the founder invested $800,000 and received 8 million shares of stock. Starware now needs to raise a second round of capital, and it has identified an interested venture capitalist. This venture capitalist will invest $1 million and wants to own 20% of the company after the investment is completed. i. How many shares must the venture capitalist receive to end up with 20% of the company? What is the implied price per share of this funding round? (3 marks) ii. What will the value of the whole firm be after this investment (the post-money valuation)? (1 mark) 1 A B I > iii ? Answer the following questions: a. Corporations generally have less than 60% debt while property investments can be financed with up to 90% debt. Provide an explanation for this difference using the tradeoff theory. (3 marks) b. Starware Software was founded last year to develop software for gaming applications. Initially, the founder invested $800,000 and received 8 million shares of stock. Starware now needs to raise a second round of capital, and it has identified an interested venture capitalist. This venture capitalist will invest $1 million and wants to own 20% of the company after the investment is completed. i. How many shares must the venture capitalist receive to end up with 20% of the company? What is the implied price per share of this funding round? (3 marks) ii. What will the value of the whole firm be after this investment (the post-money valuation)? (1 mark) 1 A B I >