Souldance, a new NJ-based fashionwear startup, anticipates that it will need $12,000,000 in venture capital to achieve a terminal value of $240,000,000 in five years. WORK OUT PROBLEM BY HAND AND SHOW WORK.

A.) Assuming it is a seed stage firm with no existing investors, what annualized return is embedded in their anticipation?

B.) Suppose the founder wants to have a venture investor inject $12,000,000 in three rounds of $4,000,000 at time 0, 1 and 2 with time 5 exit value of $240,000,000. If the founder anticipates returns of 70%, 50% and 30% for round 1, 2 and 3, respectively, what percent of ownership is sold during each of the three rounds? What is the founders year-five ownership percentage?

C.) Assuming the founder has 10,000 shares, how many shares will be issued in each of the three rounds?

D.) What are the share prices in all three rounds derived from the answers in Parts B and C?