A potential investor is seeking to invest $500,000 in our venture, which currently has 1,000,000 million shares held by us founders. We expect our venture to produce half a million dollars in income per year for the next five years. We know that a similar venture produced $1,000,000 in income and sold shares to the public for $10,000,000.

What is the percent ownership of our venture that must be sold in order to provide the venture investors target return?

a. 33.33%

b. 75.94%

c. 12.76%

d. 15.00%

What is the number of shares that must be issued to the new investor in order for the investor to earn his target return?

a. 3,156,276

b. 1,578,138

c. 4,156,276

d. 2,578,138

Answers should be B for the first question and A for the second. Can anybody tell me how do I get to these numbers? Thank you.