Dr. AB develops a new super mask.SBW Ventures values new ventures using a 40% rate of return.The expected cash flows for the super mask project by year are:

Year CF

1 -50

2 -20

3 100

4 400

5 600

a)Assume the Year 6 cash flows are $600 and is expected to be $600 in perpetuity. What valued does SBW assign to Dr. AB's super mask?

b)Assume the year 6 cash flows are $800 then grows at 8% per year in perpetuity.What valued does SBW assign to Dr. AB's super mask?

c) The assumptions in part b hold; however, SBW Venture discounts cash flows beginning at year 6 at 20% rate of return. What valued does SBW assign to Dr. AB's super mask?(hint: The ROR is still 40% for cash flows from years 1 through 5.

d)The assumptions in part c hold (i.e. assume $800 t=6 cash flows, an 8% growth rate in perpetuity from year 6, and 20% rate of return in perpetuity.)Graham Henry invests $750 in the super mask project.If SBW, Inc has funded the mask project (i.e. Graham's investment is not required to meet the CF forecast). What is Graham's ownership percentage?