Elixir Pharmaceutical Corporation is an early stage biotechnology firm in the US. It is projected that by the time the firm goes public, in 5 years, its after tax net income will reach about $10 million. The firm has no debt and 500,000 shares outstanding. Another closely related biotech firm traded in the NASDAQ has a beta of 2, a debt to equity ratio of 10%, and a price-earnings ratio of 9. The effective tax rate in this industry is around 20%. A VC fund plans to invest $5 million in the biotech firm. The funds partners understand that early stage firms demand a very high additional risk premium. Based on surveys produced by the funds valuation consultant, the average difference in required rate of return between an early stage firm and a public firm in the same industry is around 20%. The risk-free interest rate is 3% and the equity market risk premium is 6.5%. 2. As the fund considers more carefully Elixirs growth plan, it discovers that the firm will need to hire some high-caliber scientists and executives. They are likely to demand stock options amounting to 10% of outstanding shares. In the IPO, the firm is likely to issue 30% of shares to the public. With this additional information, calculate the final price per share for the VC fund. Should this price be different to the price implied in the previous valuation (from the question above), and if so, why? Make any other assumptions that you believe are necessary.