Back to basics: liquidation preferences pop quiz

We’ll send the first person who gets the right answers to these four questions two free tickets to our “how to pitch workshop” in Columbia or Charleston (or other places next year) (worth $78!). Bonus prize for showing your workings. Give you answers to the nearest whole dollar.

Assumptions:

I invested $500,000 to own 1/6th of a company. The company is sold after three years.

Questions:

1)      If I have a 1x liquidation preference (non-participating) and the company is sold for $10 million, how much is my payout?

2)      If I have a 2x participating liquidation preference and the company is sold for $10 million, how much is my payout?

3)      If I have a 4x liquidation preference (non-participating) and the company is sold for $1.75 million, how much is my payout?

4)      If I don’t have a liquidation preference and the company is sold for $1 million in a fire-sale, how much is my payout, and how much do the founders (who own the other 5/6ths of the company) receive from the disposal even though they lost me money?

Best of luck.