You are the Founder and CEO of STYLE, a women's shoes, handbags and belts company. You design your own products and sell a) Wholesale to department stores and b) Directly to consumers over the internet. You operate profitably for over three years having financed your company with friends and family and your own capital. You are looking to ramp up production, streamline the supply of raw materials and engage into a profit sharing/co-marketing agreement with Internet Direct - to - Consumer platforms such as Amazon, Shopify, etc. You estimate that you need to raise a minimum of $5.0 million to realize your immediate growth plan. Your last year financial results are as follows: ASSETS $2.2 M Designs (600,000), Equipment (400,000), Operating Long-Term Leases (400,000) Inventory ($300,000), Receivables ($250,000), Cash ($50,000), Goodwill (200,000) LIABILITIES Private Loan (250,000), Payables (50,000) EQUITY $1.9 M SALES $2.25 M, COST OF GOODS SOLD $750,000, SGA $500,000 EBITDA $1.0 M Interest $15,000 Depreciation 35,000 TAXES $250,000 NET INCOME (Earnings) $700,000 Assume that after accepting a new investment of $3.0 M, you can grow earnings for 5 years at a CAGR=8% while the residual value of STYLE beyond year 5 in todays dollars is $750,000.

c) What percentage in your company the $3.0 M investment is likely to represent?

d) What is the current value of STYLE valued at 10 times next years Forward EBITDA?

e) What is your return on equity (ROE) upon selling 100% of the company at this valuation assuming capital gains tax of 15%?

f) What is the likely ROE for the new company owner at year 6 if the original sales projections prove accurate?