I am stumped with how to answer this question. Please help me!

Mary comes up with a great idea for an iPhone application. She works on it for three months in her spare time. She creates sketches and designs, trying to figure out how it would work. She looks at other iPhone apps doing related things.

About three months into it, her interest in the project has waned a bit, but shes still thinking about it. Shes spent 10 to 20 hours on it so far. Her best friend suggests she talk to Ralph about it. She doesnt know Ralph, but her friend does. They meet for coffee. Ralph is a programmer. He works for a company in town doing Web programming. Hes also an iPhone user and has been thinking about taking a course on programming the iPhone. Ralph is excited, and his excitement rekindles Marys excitement. They agree to be partners in a new business based on this iPhone application.

Four months go by. Ralph takes Marys idea and starts developing it. It turns out, as he gets into the code, that what Mary imagined isnt quite possible on an iPhone. Ralph revises the idea radically, makes it practical, and develops a prototype. Mary meets with him three times, they talk, she accepts his changes begrudgingly. At this point Marys total hours have gone to 25, but Ralph has worked almost 120 hours on the programming.

At Ralphs suggestion, he and Mary take the prototype to Terry, who both of them know, but neither of them know well. Terry has been through a failed startup, has a business education, and is looking for a startup to do again, this time the way it should be done. Terrys skill is mostly marketing, but he knows how to develop a plan and look for funding options. Terry does a business plan and networks with local business development groups, to find investors. They win an opportunity to present to an angel investment group.

Another three months have gone by. Mary has now put in approximately 40 hours, Ralph 250 hours, and Terry 120 hours.

The three of them meet to plan their approach with the investors. Ralph wants to quit his job and work full-time on the new thing, but needs to get paid. Mary doesnt want to quit her job but wants to stay involved, shes not quite sure how. Terry wants to lead the new company as soon as he can get financing.

The business plan indicates its going to take $250,000 to develop the business for the first year, after which it will need another $750,000 to have enough cash to run on its own.

During this meeting, Mary and Ralph and Terry come to a difficult realization: theyve never talked about who should own how much of this company, or how much they will offer to investors in exchange for $250K.

Write a paper on how you would you fairly divide the company. Remember you are asking for $250,000 now from investors and $750,000 a year from now. Make your case, defend it, and justify it.