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Suppose AIC is considering a $10M Series A investment in PAC. The proposed structure is...

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Accounting

Suppose AIC is considering a $10M Series A investment in PAC. The proposed structure is CP with APP of $12M or 10M shares. The employees of PAC has 20M shares. Following series A investment, PAC will have 30M common stocks outstanding if series A is converted to common. AIC has $500M of committed capital and management fee of 2% per year with the 10 year lifetime of the fund. GP% is 15%.

(1) Compute LP cost for the Series A investment.

(2) Draw exit diagram for Series A and Solve for the LP valuation equation for this investment

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