Password Limited (FWD) has developed a new type of online security and encryption application, which is a next generation encryption application and only the second commercially available app of its kind. Password Ltd is a relatively new company and they are seeking funds to commercialise additional online security applications. They have approached venture capital company Chardonnay Ventures for funding. Chardonnay Ventures {CNN is considering investing into Password Ltd and is assessing their potential investment. CNV have collected the following information: Amount ofinvestment: $10 million; Password Ltd should become protable in three years, so term of the investment is three years; The expected prot at the end of three years is $3 million; Password Ltd currently has 1 million ordinary shares on issue and outstanding, All shares are owned by founders; For a three-year investment like this, Chardonnay Ventures requires a return of 33 percent per annum, compounding annually; There is a similar company to Password Ltd, Encrypto Intelligent Ltd [ElL]. EIL generated a profit of $2,468,000 last year. EIL's market value of equity is $28 million. Neither Password Ltd nor Encrypto Intelligent Ltd have any debt outstanding. Required: [i] Use the VC method to determine the value of Password Ltd at the end of three years. [ii) Calculate: i. The present value of Password Ltd ii. The pre-money value of Password Ltd iii. The post-money value of Password Ltd [iii] The percentage of Password Ltd that Chardonnay Ventures will own for the $10 million investment. . There is a similar company to Password Ltd, Encrypto Intelligent Ltd (EIL). EIL generated a profit of $2,468,000 last year. EIL's market value of equity is $28 million. . Neither Password Ltd nor Encrypto Intelligent Ltd have any debt outstanding. Required: (i) Use the VC method to determine the value of Password Ltd at the end of three years. (ii) Calculate: i. The present value of Password Ltd ii. The pre-money value of Password Ltd iii. The post-money value of Password Ltd (iii) The percentage of Password Ltd that Chardonnay Ventures will own for the $10 million investment. b) You are currently analysing Westie Limited (WTL), which is listed on the Australian Securities Exchange (ASX). As part of your analysis, you want to perform a relative valuation. You have the following data for WTL and its competitors, Southie Limited (SOL) and Northie Limited (NOL) Share Price Current Forecast Number of shares on Company ($) earnings ($m) earnings ($m) issue (m) WTL 1.43 13 17 108 SOL 0.22 127 135 8,407 NOL 6.16 980 1,113 1,756 Using the data in the table above, estimate the intrinsic value of WTL share using a trailing P/E ratio. Redo your estimate using a leading P/E ratio. Briefly comment on any difference between the two estimates