Question 13 a-d PLEASE (:

PLEASE (:

Suppose that a VC investor Owl invests in a portfolio company Newco. Owl draws an exit diagram as shown in the following Exhibit. What is the portfolio of options corresponding to this exhibit? A. C(20) - C(10) + 1/4 C (40) B. C(40) - 1/4 C(20) + C (40) C. 1/4 C(20) - C(40) + C (10) D. C(10) - C(20) + 1/4 C (40) If the exit value of the portfolio company is 80, how much will Owl take? A. 40 B. 30 C. 20 D. 10 Suppose EBV is considering a $5M Series A investment in Newco. EBV proposes to structure the investment as 5M shares of CP. The employees of Newco have claims on 15M shares of common stock. Following the Series A investment, Newco will have 15M on shares outstanding, with another 5M shares on conversion of the Series A. The $100M EBV fund has annual fees of 2 percent for each of its 10 years of life and earns 20 percent carried interest on all profits with committed capital as base. Expected GVM is 2.5 and GP% = 10%.. Use VCV tools. (a) Compute the LP cost for this investment. (b) Solve for the LP valuation equation for this investment. (c) Suppose that total valuation is $30M. What is the LP valuation? (d) Find the breakeven valuation for the investment under base-case assumptions