The CEO of an early-stage software company is seeking $5 million from venture capitalists. The reasonable projected net income of $5 million in year 5 can be valued at a PE of 20. Furthermore, the sales in year 5 are projected at $25 million. Assuming no dilution from additional financings, what share of the company would the venture capitalists expect if their anticipated rate of return were 50 percent? The company has one million shares outstanding before the venture capitalists purchase shares.

What price per share should the venture capitalists pay?