1. EBV is considering a $5M Series A investment in Newco. EBV proposes to structure the investment as 6M shares of convertible preferred stock. The employees of Newco have claims on 10M shares of common stock. Thus, following the Series A investment, Newco will have 10M common shares outstanding and would have 16M shares outstanding on conversion of the CP. EBV estimates a 25% probability for a successful exit, with an expected time in 5 years and an exit valuation of $500M. The $100M EBV funds has annual fees of 2% for each of its 10 years and earns 20% carried interest on all profits. How sensitive is the recommendation to different assumptions about the exit valuation and the probability of success?