Is $20K worth of development worth 1% of company?

A friend of mine, who is a mechanical engineer, has secured funding for his startup.

The investor is getting 5% of his company for $100K.

Should I offer $20K worth of development for 1% of his startup? I would come up with an approximate time commitment by converting $20K to hours using a $50/hour contract rate (which is what I can easily get in the market right now).

The product is a medical device that takes certain measurements of users. I would be responsible for coding the number crunching software that takes the data as input and displays useful info to the user via the web. I would also be coding in Ruby on Rails, incidentally.

Can you guys give me any insight? ... Is my reasoning way off base? Thanks!