What fraction of the firm will the vc receive in exchange

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Reference no: EM131315602

An entrepreneur seeks $4 million from a venture capitalist. They agree that the entrepreneur's venture is currently worth $12 million. When the company goes public in an IPO in three years, it is expected to have a market capitalization of $70 million.

Given the company's stage of development, the VC requires a 40 percent return on investment. What fraction of the firm will the VC receive in exchange for its $4 million investment?

Reference no: EM131315602

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