United Therapeutics, Inc. (UTI) is a startup that will provide drug treatments for pulmonary hypertension. UTI founders are seeking funds to finish the FDA approval process and increase production capacity to commercial scale. The FDA approval and scale-up will take two years, with revenues beginning in Year 3. The entrepreneurs have prepared financial projections and developed three scenarios that yield the CF forecast shown in the table. They have also assigned a probability to each scenario.

UTI is entirely equity financed and the CFs shown are the cash flows to stockholders.

The value period is six years, at the end of which the entrepreneurs anticipate two possible exits for investors:

1. If the success scenario is realized, UTI would go public. The continuing value multiple will be 10x UTI's Year 6 cash flow.