Suppose that EBV is considering a $10M Series A investment 1 answer below »

Suppose that EBV is considering a $10M Series A investment in Newco. EBV proposes to structure the investment as 6M shares of convertible preferred stock (CP) plus RP with $4M APP. The employees of Newco have claims on 10M shares of common stock. Following the Series A investment, Newco will have 10M common shares outstanding and would have 16M shares outstanding on conversion of the CP.

(a) After this round, what are the pre- and post-money valuations for Newco?
(b) Find IVpost and IVpre.