Consider a start-up requiring $5,500 initial funding Furthermore, assume that a VC estimates the firm would yield the following cash flows with probability p=0.8 and 1p=0.2, respectively. Based on his estimates above, the VC demands 80.1% of equity in a simple common stock capitalization in order to attain his required IRR of 40%. The entrepreneur agrees to the VC's demand to take 80.1% of the equity. However, the entrepreneur has a more optimistic view of the probability of low and high realizations. The entrepreneur assigns p=0.20 and 1p=0.80. Calculate the entrepreneur's expected cash flow in year 3 under his more optimistic view. $9,463 $7,216 $5,829 $6,683 $8,179