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d) Assume the preferred stock is participating. At an exit value of $20,000,000, what is the payoff to the common stockholders (i.e. Founders & Management)? e) If the VC owned non-participating convertible preferred stock with a 2x liquidation preference at what exit value is the VC indifferent between either converting or not converting?

d) Assume the preferred stock is participating. At an exit value of $20,000,000, what is the payoff to the common stockholders (i.e. Founders & Management)? e) If the VC owned non-participating convertible preferred stock with a 2x liquidation preference at what exit value is the VC indifferent between either converting or not converting?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Pls answer d and e using info in screenshot

Caleb Clark Ventures invests $4 million in convertible preferred stock in a company with an $12 million pre-money valuation. The term sheet shows the investment is non- participating with 1x liquidation preference.
Transcribed Image Text:Caleb Clark Ventures invests $4 million in convertible preferred stock in a company with an $12 million pre-money valuation. The term sheet shows the investment is non- participating with 1x liquidation preference.
d) Assume the preferred stock is participating. At an exit value of $20,000,000, what is the payoff to the common stockholders (i.e. Founders & Management)? e) If the VC owned non-participating convertible preferred stock with a 2x liquidation preference at what exit value is the VC indifferent between either converting or not converting?
Transcribed Image Text:d) Assume the preferred stock is participating. At an exit value of $20,000,000, what is the payoff to the common stockholders (i.e. Founders & Management)? e) If the VC owned non-participating convertible preferred stock with a 2x liquidation preference at what exit value is the VC indifferent between either converting or not converting?
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