Question: 5. The TechTwo Corporation is about to begin producing and selling its prototype product. Annual cash flows for the next five years are forecasted as:
5. The TechTwo Corporation is about to begin producing and selling its prototype product. Annual cash flows for the next five years are forecasted as: NH Year 1 2 3 4 5 Cash Flow -$60,000 -$20,000 $100,000 $500,000 $800,000 a Assume annual cash flows are expected to remain at the $800,000 level after Year 5 (i.e., Year 6 and thereafter). If TechTwo investors want a 40 percent rate of return on their investment, calculate the venture's present value b Let's assume that Tech Two investors have valued the venture as requested in Part A. An outside Investor wants to invest $2,000,000 in Tech Two now (at the end of Year O). What percentage of ownership in the venture should the TechTwo investors give up to the outside investor for a $2,000,000 new investment
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