Case X: A potential investor is seeking to invest $500,000 in a venture, which currently has 1,000,000 million shares held by its founders, and is targeting a 50% return five years from now. The venture is expected to produce half a million dollars in income per year at year 5. It is known that a similar venture recently produced $1,000,000 in income and sold shares to the public for $10,000,000.

26. In Case X, what is the is the pre-money valuation?

(a) $158,400

(b) $193,900

(c) $316,800

(d) $120,300

(e) None of the above

27. In Case X, what is the post-money valuation?

(a) $408,377

(b) $658,354

(c) $249,977

(d) $499,954

(e) None of the above

28. In Case X, what is the value of the venture in year five using direct capitalization?

(a) $100,000

(b) $1,000,000

(c) $500,000

(d) $5,000,000

(e) None of the above