2. An entrepreneur has purchased an asset for $180,000 which will produce a cash inflow of $350,000 two years from today. He plans to issue 1000 shares of common stock of which he would keep 100 for himself and sell 900 shares to the general public. His business, which consists entirely of this one asset, will cease to exist after two years. The market rate of interest is 20% and the future cash inflow to the firm is guaranteed. At what price per share should the entrepreneur sell the common stock? Please explain your reasoning. 5 marks

An entrepreneur has purchased an asset for $180,000 which will produce a cash inflow of $350,000 two years from today. He plans to issue 1000 shares of common stock of which he would keep 100 for himself and sell 900 shares to the general public. His business, which consists entirely of this one asset, will cease to exist after two years. The market rate of interest is 20% and the future cash inflow to the firm is guaranteed. At what price per share should the entrepreneur sell the common stock? Please explain your reasoning. 5 marks