Question $3$: Pancake stack in action $($p$.183$ and $184)$

Hint: When computing payouts fromparticipating preferred stock, you use the exit value AND the amount remaining after the payout to the other investors. For example, if series A investor purchases a $30\%$ participating preferred for $$10M,$ series B investor purchases a $40\%$ participating preferred for $$20M$ and the company exits for $$50M,$ the payout is as follows:

$$20$M back to series B investor

$,$$$10M$ back to series A investor

Remainder $($ $$50M-$$$20M-$$$10M=$$$20M)$ is split $40\%(B),30\%(A),30\%($founders$)$

Total Exit:

Series B $$20M+$$$20M**40\%=$$$28M$

Series $A$$$10M+$$$20M**30\%=$$$16M$

Founders $$50M-$$$28M-$$$16M=$$$6M($note how this is also the same as $30\%$ of the $$20M$ that "remained"$]$after the payout of preferred shared$)$

Inky has two equal owners. In Series A funding, they sell $20\%$ of the company to investor A for $$5M$ and give them participating preferred shares. In Series B$,$ they sell another $20\%$ of their company to Investor B for $$15M,$ this time providing participating preferred shares. In Series C$,$ they sell $15\%$ of their company for $$20M$ to Investor $C$ who purchases participating preferred shares. One year later, prior to Series D they are acquired by Amazon for $$200$ M$.$ How much will EACH entrepreneur and investor make from the exit? Assume no dilution across rounds. $($I$\text{'}$m looking for the five$-$dollar amounts, one for Investor A$,$ Investor B$,$ Investor C and EACH of the entrepreneurs$)$

Investor $C$ gets:

Investor B gets:

Investor A gets:

Entrepreneur $1$ gets:

Entrepreneur $2$ gets: