As the founder of a startup company that designs portable scooters, you recently received a financing offer from Ali ventures. The investment amount will be $5M at a pre-money valuation of $15M. Investors ask for participating preferred stock with a liquidation preference of 2.0x and a dividend of 10% per year. You expect that the company could be sold in 5 years.

A) What is the amount of the preferred terms?

B) What is the cash flow to the founders if the company is sold at $50M after 5 years?

C). What is the cash flow to the founders if the participating preferred stock has a cap of $40M?

D) Which option is better for you, with to without cap?