$[$Venture Present Value Concepts$]$ Refer to the FrothySlope microbrewery example at the beginning of this chapter.

A$.$ How does the $$500,000$ piece of the terminal value relate to the future value of the $$100,000?$ That is$,$ the brewpub investor was looking for a $40$ percent return. The fiveyear future value of $$100,000$ growing at $40$ percent is $100,000(1\mathrm{.}4{)}^5=$$$537,824,$ slightly more than $$500,000.$ Does this mean the investor is not really expected to make $40$ percent on the $$100,000,$ even though we used that discount rate to arrive at the initial $$5,856,935$ valuation? $($Hint: What about explicit forecast period flows?$)$

B$.$ Returning to the brewpub spreadsheet with all flows included, how much more of the venture's ownership of surplus cash flows would have to be sold for the $$100,000$ if the investor expected to make $70$ percent $($given Jim's utopian vision of his future$)?$

C$.$ What percentage of the brewpub's present value is contained in the present value of the terminal value $($the venture's reversion value$)?$

D$.$ How much ownership of the brewpub cash flows would need to be sold to an investor demanding $40$ percent but agreeing that the mature brewpub venture would terminally grow at a rate of $8$ percent with a risk profile requiring a discount rate of $16$ percent? What if the terminal growth rate were $10$ percent and the discount rate $18$ percent?