Problem #2 (16 points) A venture funded company is 5 years old and considering an acquisition offer which will net the firm's equity holders $ 17,500,000. During the start-up funding phase, the Founders borrowed S1,000,000 from family members through a Loan bearing 8% SIMPLE ANNUAL interest. Additionally, 3 years ago the company sold $ 2,500,000 in participating preferred Stock which is convertible into a 40% ownership interest in the company. The Preferred Stock has a 2X Liquidation Preference, and is CAPPED at 3.5X. The company made its last annual interest payment 6 months ago. How would the $17,500,000 proceeds be distributed if: The Preferred Stock Investor exercises its Liquidation Preference (5) The Preferred Stock Investor DOES NOT exercise its Liquidation Preference. (5) What is the imputed rate of return to the investors if they exercise the preference, and they receive the distribution 3.75 years (not the 2 years indicated above) after investment? (4) If the $17,500,000 offer is accepted, which distribution option should the Investors take ane WHY? (2)