(Total point is 4 with 3 extra credit). Show all works to get full credits. Assume that EBV (Series A) and Talltree (Series B) invested in Newco. It is now one year later. Owl is considering a $20M Series Cinvestment in Newco. Owl proposes to structure the investment as 12M shares of convertible preferred stock. The employees of Newco have claims on 10M shares of common stock, and the previous venture investors hold 6M shares of Series A convertible preferred (EBV) and 8M shares of Series B Convertible Preferred (Talltree), Thus, following the Series Cinvestment, Newco will have 10M common shares outstanding and would have 36M shares outstanding on conversion of the CP. Owl estimates a 50 percent probability for a successful exit, with an expected exit time in three years, and an exit yaluation of $300M. The $500M Owl fund has 2% management fees for 10 year and 25% carried interest. Expected GVM for the fund 2.5 . Assume the cost of capital is 10\%. Apply standard assumptions listed in the textbook and lecture notes for additional data and information required for the valuation. a. What is your investment recommendation for O w GPs following standard VC method? How much is the GP cost and partial valuation? b. What is your investment recommendation for Owl LPs following modified VC method? How much is the LP cost and LP valuation? c. If the cost of capital is 15%, how do your answers change for a) and b)? Answer the next four (4) questions using the following information. Assume that EBV (Series A) invested $5M for 6M shares in Newce, and it is now one vear later. Talltree is considering a $10M Series B investment in Newco. Talltree proposes to structure the investment as 8M shares of convertible preferred stock. The employees of Newco have claims on 10M shares of common stock, and the previous venture investors (EBV) hold 6M shares of Series A convertible preferred. Thus, following the Series B investment, Newco will have 10M common shares outstanding, and would have 24M shares outstanding on conversion of the CP. Talltree estimates a 40 percent probability for a successful exit, with an expected exit time in 4 years and an exit valuation of $500M. The $250M Talltree fund has annual fees of 2 percent for each of its 10 years of life and earns 20 percent carried interest on all profits. Expected GVM = 2.5. Apply standard assumptions listed in the textbook and lecture notes for additional data and information required for the valuation. How much is the VC cost? $5M $10M $15M $20M Question 27 1pts How much is the partial valuation? $15.5M $27.3M $819M $1366M