TVC's objective is to earn a rate of return of 50% per annum {compounded} on Series A invesbnents to meet their limited partnersr returnon-invesunent expectations while covering TVC's general partner fees and carried interest. TVC's return objectives for Series B and Series C invesunents are 40% p.a. and 30% p.a., respectively. These targeted returns would also pertain to oier venture capital investors who may participate in the syndicate TVC may form. Question #1. What share of XL (i.e., what 96 of the company} must TVC or its syndicate acquire in October 201? if they fund the $1,500,000 amount of the Series A round? How many new shares of XL stock should they acquire? What should be the price per share? What are XL's premoney and postmoney valuations at this rst round? Question #2. If TVC or its syndicate funds the Series E and Series C rounds, what share of XL must they acquire in each round? How many new shares of XL stock should they acquire in each round? What shon be the price per share in each round? What are XL's premoney and post-money valuations at the Series B and Series C rounds, respectively? Question #5. At the planned "liquidity event" in October 2022, what will Ken Cook's shares in KL be worth? What annual rate of return (compounded) on his original $30,000 investment does this represent? What will each of the other co-founders' shares be worth? What annual rate of return (compounded) on their original $10,000 investments does this represent? What will Caiy's converted shares he worth? What annual rate of return (compounded) on her original $400,000 investment does this represent? Finally, explain any difference between the rate of return earned by Ken and that earned by each of the other co-founders. Question #4. Ken briey considered the alternative of eliminating the Series E and Series C rounds and, instead, raising the total amount of $12,000,000 in the initial Series A round. Assuming the investors would require a 50% per annum (compounded) rate of rennn, how would this alternative change your answers to question #1, above? Explain. Note: Ken does not pursue this alternative. Question #5. Based on their prior experience, both Cathy and Jerry believe that stock options will be needed as incentives to recruit a management team for XL. They convince Ken to plan for the future creation of a pool of new XL shares for incentive stock options equal, in total, to 10% of the company at the time of the liquidity event in 2022. Given this plan to create a future pool of incentive stock options immediately prior to the liquidity event, recalculate your answers to questions #1, #2 and #3. Question #0. Immediately before the Series 13 round, it becomes apparent that the liquidity event will be delayed two years until October 2024 i that an additional $2,000,000 (i.e., a total of $10,500,000] will be needed in the scheduled Series C round. Although the liquidity event will be delayed two years, the Series E and Series C rounds of invesbnents remain scheduled for October 2019 and October 2020, respectively. Despite the delay, the estimated terminal value of XL remains unchanged. At the time this delay becomes apparent, TVC's Series A invesunent is already a donedeal and cannot be renegotiated. The future stock option pool, as described above, E included in XL's plans. How does this change your answers to question #5? Given this delay scenario, what compound annual rates of return are actually realized on the Series A, Series B and Series C rounds of invesbnents? Question #2. During TVC's term sheet negotiations, it is agreed that TVC will receive convertible preferred XL stock in return for their Series B and Series C investments. The founders' shares, Catth convertible note shares, the Series A shares, and the option pool shares remain common stock. The difference between common and preferred shares is that preferred shareholst receive a xed annual dividend payment equal to a prescribed percentage of their invesbnent. in this case, for Series B and C, TVC negotiates for a cumulative, noncash, noncompounding dividend of 10% per annum. At the liquidity event in 202 2, each preferred share is convertible into one new XL conunon share and the accumulated dividends are convertible into new XL common shares at the original price per share paid by WC