Problem
Greyhorse is willing to provide $1 million fundings in exchange for a share of the common stock in a firm called Bull-Builders. As this the first-stage financing, Greyhorse's required rate of return is 60% per year based on a 5-year investment horizon without receiving any cash until the end of this period. Forecast of EBITDA for Bull-Builders in year 5 is $8m. EBITDA multiple of similar firms is 6 times. Bull-Builders' projected balance sheet at year 5 includes $200,000 in cash and $2m in interest-bearing debt. What is the ownership interests based on this VC financing?