Piper Corporation needs to raise $500,000 to execute its business plan. Polaris Capital will invest the $500,000 in a Series A financing round, if the parties can reach agreement on Polariss ownership percentage. The parties agree that the time to exit should be at the end of 5 years at which point Piper should have Sales of $4,000,000. Polaris requires a 50% compound annual rate of return. No further financing is contemplated prior to exit. Piper's founder owns 3,500,000 shares of common stock in the company. A similar venture, Maisy Corp., was recently acquired at a $5,000,000 Enterprise Value. In the last 12 months (LTM), Maisy Corp's Sales were $1,000,000.

Please show your work!

Answer the following questions using the Venture Capital (VC) valuation method:

A) Calculate the exit value of Piper Corporation based on a 5-year exit

B) Calculate the present value using Polariss required rate of return

C) What percentage ownership will Polaris expect for its $2,500,000 Series A investment?

D) How many shares will Polaris expect and what price per share will they offer to pay?

E) Summarize the shares and ownership percentages in a Capitalization Table