EBV made a $6M Series A investment in Newco. EBV's investment is structured as 10M shares of convertible preferred stock (CP). The founder and the employees of Newco have claims on 10M shares of common stock. The $100M EBV fund has annual fees of 2 percent for each of its 10 years of life and earns 20 percent carried interest on all profits with committed capital as base. Expected GVM is 2.5. As the value of Newco grows, Talltree is considering $12M Series B investment in Newco. Talltree proposes to structure the investment as 10M shares of convertible preferred stock (CP). The $250M Talltree fund has annual fees of 2 percent for each of its 10 years of life and earns 20 percent carried interest on all profits with committed capital as base. Expected GVM is 2.5. 1. After the investment of Talltree, what is the LP valuation equation of series A investor, EBV? A. Series A: 0.9*[(C(12) – C(18) +(1/2)*C(24)-(1/6)*C(36)] =$15M. B. Series A: 0.9*[(C(12) – C(18) +(1/2)*C(24)-(1/6)*C(36)]

Aprisoner is trapped in a cell containing three doors. the first door leads to a tunnel that returns him to his cell after two days of travel. the second leads to a tunnel that returns him to his cell after three days of travel. the third door leads immediately to freedom. (a) assuming that the prisoner will always select doors 1, 2 and 3 with probabili- ties 0.5,0.3,0.2 (respectively), what is the expected number of days until he reaches freedom? (b) assuming that the prisoner is always equally likely to choose among those doors that he has not used, what is the expected number of days until he reaches freedom? (in this version, if the prisoner initially tries door 1, for example, then when he returns to the cell, he will now select only from doors 2 and 3.) (c) for parts (a) and (b), find the variance of the number of days until the prisoner reaches freedom. hint for part (b): define ni to be the number of additional days the prisoner spends after initially choosing door i and returning to his cell.