A good rule of thumb is that the earnings after tax should be around 20% of the capital employed. That is, the business will pay back the investment in 5 years.

As an entrepreneur you need to show a potential investor that what they are buying, a share of the profits, is worth the money. The generally accepted method of valuing a business is known as the discounted cashflow model. This works on the principle that a bird in the hand is worth two in the bush. In other words, it recognises that $100 now may be worth more than $105 in a years time.
The answer being how much you 'discount' future earnings. That is, a percentage rate of return that is the sum of a 'risk-free' return plus a risk premium.

There are some quite complicated mathematical techniques that can be employed in assessing the value of a business proposal. The following calculator is a simple but still accurate means of determining whether you are asking too much (or too little) of a potential investor.
The discount rate in the calculator is set at 10%. It can be changed but really shouldn't go below 6%.