On further analysis and discussion, Samantha and John agree that the company will probably need another round of financing in addition to the current $5 million. Samantha believes that NewVenture will need an additional $3 million in equity at the beginning of year 3. While the first round investors (including herself) will require a 50% return, Samantha feels that round 2 investors, in recognition of the progress made between now and then, will probably have a hurdle rate of only 30%. As before, management should have the ability to own a 15% share of the company by the end of year 5.

How would your answers change if you assume that the 15% for management is allocated at the beginning of the period and that management gets diluted as new shares are issued?