Allen and Nicole founded a new real estate venture last year with $

$100$

$,$

$000$

$$in equity capital for which they received

$3$

$,$

$000$

$,$

$000$

$$shares of common stock. The startup needs an additional $

$2$

$,$

$000$

$,$

$000$

$$to carry out the founders

$$

$$optimistic business plan.

A venture capitalist, who expects a

$40$

$\%$

$$compound annual rate of return, and the founders agree that the horizon

$($

time to exit

$)$

$$for the investment should be

$5$

$$years$.$ The successful venture is expected to produce $

$4$

$,$

$000$

$,$

$000$

$$per year in income at that time.

A comparable venture recently sold shares to the public for $

$50$

$,$

$000$

$,$

$000$

$,$

$$and that its last year of income was $

$10$

$,$

$000$

$,$

$000$

$.$

Using the information provided above, answer the following:

a

$.$

$$Calculate the P

$/$

E at year

$5$

$.$

b

$.$

$$Calculate the present value of the venture.

c

$.$

$$Calculate the issue share price.