Question: Now assume the more realistic scenario where the investment is spread over three rounds: $1,500,000 at t=0, 1,250,000 at t=2, and 750,000 at t = 4. Investors at t=0 require a 70% annual target return, investors at t=2 will demand a 50% annual target return, and investors at t=4 will require a 30% annual target return. As before, the firm is expected to earn $6.25 million in year 5, and comparable firms have a P/E ratio of 18. There are 1 million shares owned by the founder and the VC investors will get new shares. Early investors anticipate the later investments.

1. What percentage of the final value of the firm does the round 1 investor require at t=5? Please answer in decimal form to four decimal places.

2. The same scenario continues. And I bet you expected this question. What percentage of the final value of the firm does the round 3 investor require at t=5? Answer in decimal form to 4 decimal places.

3. The same scenario continues. How many shares will the round 1 investor receive when the investment is made? Remember to answer without commas.

4. The same scenario continues. Still regarding the round 1 investor--what price per share does that reflect when the investment is made? Do not use the dollar sign. Answer in dollars to two decimal places.

5. The same scenario continues. How many shares will the round 2 investor receive when the investment is made? Again, do not use commas.

6. The same scenario continues. Still regarding the round 2 investor--what price per share does that reflect when the investment is made? Do not use a dollar sign. Answer in dollars to two decimal places.

7. The same scenario continues. How many shares will the round 3 investor receive when the investment is made? Again, do not use commas.

8. The same scenario continues. Still regarding the round 3 investor--what price per share does that reflect when the investment is made? Do not use the dollar sign. Answer in dollars to two decimal places.

9. The same scenario continues. Tell me the percentage of the firm the first investor owns at t=0 (at the time of his investment). Note that this takes a little thought and is often gotten wrong. Answer in decimal form to 4 decimal places.

10. The same scenario continues. Tell me the post-money valuation at round 1 (t=0)? Answer in dollar to two decimal places. Do not use commas or the dollar sign.

11. And now, what is the pre-money valuation at round 1? Again, no dollar sign, no commas.

12. Yes, we are going to do this for the next two rounds too. What is the post-money valuation at round 2 (t=2)? No dollar sign, no commas.

13. And now the pre-money valuation of round t (t=2)? No dollar sign, no commas.

14. What is the post-money valuation at round3 (t=4)? No dollar sign, no commas.