Office helpers is a private firm that manufacturers and sells office supplies. The firm has limited capital and is estimated to have a value of $80million with capital constraints. A venture capitalist is willing to contribue $20million to the firm in exchange for 30% of the value of the firm. With this additional capital, the firm will be worth $120 million.

a. Should the firm accept the venture capital?

b. At what percentage of firm value would you as the owner of the private firm break even on the venture capital financing?

Assume market risk premium is 5.5% and tax rate of 40%