$[$Venture Present Values$]$ The TecOne Corporation is about to begin producing and selling its prototype product. Annual cash flows for the next five years are forecasted as:

YEAR CASH FLOW

$1$$ $50,000$

$2$$ $20,000$

$3$$$100,000$

$4$$$400,000$

$5$$$800,000$

Assume annual cash flows are expected to remain at the $$800,000$ level after Year $5($i$.$e$.,$ Year $6$ and thereafter$).$ If TecOne investors want a $40$ percent rate of return on their investment, calculate the venture$$s present value.

Now assume that the Year $6$ cash flows are forecasted to be $$900,000$ in the stepping$-$stone year and are expected to grow at an $8$ percent compound annual rate thereafter. Assuming that the investors still want a $40$ percent rate of return on their investment, calculate the venture$$s present value.

Now extend Part B one step further. Assume that the required rate of return on the investment will drop from $40$ percent to $20$ percent beginning in Year $6$ to reflect a drop in operating or business risk. Calculate the venture$$s present value.

Let$$s assume that TecOne investors have valued the venture as requested in Part C$.$ An outside investor wants to invest $$3$ million in TecOne now $($at the end of Year $0).$ What percentage of ownership in the venture should the TecOne investors give up to the outside investor for a $$3$ million new investment?