You are looking to at a possible investment in a start up that would require a $3 million dollars. Given the risk, you require an annual rate of return of 45%. The company earned $900,000 EBITDA this year, and is expected to grow at 20% for the next 8 years. In the 8 years, you think the company could sell at a 8x multiple of EBITDA.

a. Assuming that the firm will have 1 million in debt at the time of the sale 8 years from now, what is the enterprise value of the firm? What is the equity value of the firm? b. In order to make this investment, what ownership percentage would you require in exchange for the $3 million dollars? c. What is the post-money valuation and the pre-money valuation of the start-up? d. If the owner is not comfortable with giving away that much equity, what are some alternatives that the owner could propose and whats the rationale for it?