Just D and E

. [Venture Present Values] Ben Toucan, owner of the Aspen Restaurant, wants to deter- mine the present value of his investment. The Aspen Restaurant is currently in the development stage but Toucan hopes to "begin" operations early next year. After-tax cash flows during the next five years are expected to be as follows: Year 1-0, Year o, Year 3 0, Year 4 $2.5 million, and Year 5 $3 million. Cash inflows are ex pected to be $3.18 million in Year 6 and are expected to grow at a 6 percent a rate thereafter. Recall from Chapter 7 that venture count rates when valuing ventures at various stages of their life cy target discoun nnual investors often use different dis- t rates by life cycle stage are: development stage, 50 percent; startup stage, 40 percent; survival stage, 35 percent; and early rapid-growth stage, 30 percent As ventures move from their late rapid-growth stages and into their maturity stages, a 20 percent discount rate is often used. A. Determine the Aspen Restaurant's terminal or horizon value at the end of five B. What is the present value of the Aspen Restaurant, assuming that it is a C. What percent ownership interest should Ben Toucan be willing to give today to a years, assuming the venture will be entering its maturity stage. development-stage venture? venture investor, Sherri Isitar, for her $1 million investment? D. Let's assume that the Aspen Restaurant was started early last year and, thus, is in stage and has the same future cash flow expectations as indicated ear- ical startup-stage required rate of return or discount rate, calcu- its startup lier. Using a typi late the present value of the Aspen Restaurant. E. Owning a restaurant is often considered to be a risky investment, in that restau- stages. As- sume that a typical survival-stage required rate of return is applied to all future cash flows estimated for the Aspen Restaurant. Calculate the venture's present Daer to the FrothvSlope microbrewery example at rants often are continuously moving into and out of their survival value . [Venture Present Values] Ben Toucan, owner of the Aspen Restaurant, wants to deter- mine the present value of his investment. The Aspen Restaurant is currently in the development stage but Toucan hopes to "begin" operations early next year. After-tax cash flows during the next five years are expected to be as follows: Year 1-0, Year o, Year 3 0, Year 4 $2.5 million, and Year 5 $3 million. Cash inflows are ex pected to be $3.18 million in Year 6 and are expected to grow at a 6 percent a rate thereafter. Recall from Chapter 7 that venture count rates when valuing ventures at various stages of their life cy target discoun nnual investors often use different dis- t rates by life cycle stage are: development stage, 50 percent; startup stage, 40 percent; survival stage, 35 percent; and early rapid-growth stage, 30 percent As ventures move from their late rapid-growth stages and into their maturity stages, a 20 percent discount rate is often used. A. Determine the Aspen Restaurant's terminal or horizon value at the end of five B. What is the present value of the Aspen Restaurant, assuming that it is a C. What percent ownership interest should Ben Toucan be willing to give today to a years, assuming the venture will be entering its maturity stage. development-stage venture? venture investor, Sherri Isitar, for her $1 million investment? D. Let's assume that the Aspen Restaurant was started early last year and, thus, is in stage and has the same future cash flow expectations as indicated ear- ical startup-stage required rate of return or discount rate, calcu- its startup lier. Using a typi late the present value of the Aspen Restaurant. E. Owning a restaurant is often considered to be a risky investment, in that restau- stages. As- sume that a typical survival-stage required rate of return is applied to all future cash flows estimated for the Aspen Restaurant. Calculate the venture's present Daer to the FrothvSlope microbrewery example at rants often are continuously moving into and out of their survival value