Samantha Smith believes Thompson will have to grant generous stock options in addition to the salaries projected in his business plan. From experience, she thinks management should have the ability to own at least a 15% share of the company in the form of options by the end of year 5. 6. What share of the company should Samantha insist on today if the option pool is created AFTER her investment and her required rate of return is 50%? 7. What share of the company should she insist on if the option pool is allocated BEFORE her investment? you gave this answer to question 6 and 7 but it does not seem right to me, what is the logic behind insisting on shares or not? and shouldn't the answer of shares be in an amount and not a percentage? If the option pool is created AFTER her investment : - Required rate of return ( Rate ) = 50 % Number of years ( N ) = 5 S h a r e = ( 1 + 0.50 ) 1 5 1 = ( 1.50 ) 0.20 1 Samantha should insist on owning approximately 9.54% of the company today if the option pool is created after her investment. 2. If the option pool is allocated BEFORE her investment: - Required rate of return (Rate) = 50 % Number of years ( N ) = 5 S h a r e = ( 1 + 0.50 ) 5 + 1 1 = ( 1.50 ) 6 1 7.5938 or 759.38 % Samantha should insist on owning approximately 759.38 % of the company today if the option pool is allocated before her investment