2. [Venture Present Values] A venture investor wants to estimate the value of a venture. The

venture is not expected to produce any free cash flows until the end of Year 6, when thecash flow is estimated at $2,000,000, and is expected to grow at a 7 percent annual rate per

year into the future.A. Estimate the terminal value of the venture at the end of Year 5 if the discount rate at

that time is 20 percent.B. Determine the present value of the venture at the end of Year 0 if the venture investorwants a 40 percent annual rate of return on the investment.