Question 3 (5 points) The new high tech company FinTechApps are finishing their financial statements for 2017 and will be reporting a profit (net income) for 2017 of $2 million. The company was started in 2014 but was not able to bring their product to the market until 2017 and this is consequently their first profit ever. The founder estimates that the profits will grow with 15% per year for the coming 4 years and then grow at a constant rate of 5% per year as other companies begin to enter the market. The founder of FinTechApps is in complete ownership of the firm and the firm has no long-term debt. The founder is now interested in moving on to new ideas and is selling the company and cashing out. Similar listed firms have a beta value of 1.6 and the market return is 13%. The risk free interest rate is 2%. Given that FinTechApps is a new and private firm additional risk compared to listed firms will be compensated with an extra risk premium of 20%. a) Estimate an appropriate required rate of return for an equity investor in FinTechApps. b) What is a fair price of FinTechApps using a discounted cash flow valuation? Use your required rate of return in a) as your discount rate. c) Instead of equity investors or long-term debt, FinTechApps has relied on financial bootstrapping to fund the company during its early years. What does that mean and what are the pros and cons of using financial bootstrapping? (Please limit your answer to a maximum of half a page)