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The vice president has the option to purchase the company after five years. The purchase price for the company is set at 4 times earnings (profit), computed as average annual profitability over the next five years. In five years, the company is expected to be worth $10 million. On the following graph, use the green points (triangle symbols) to plot the vice president's expected profit from buying the company, for average annual profitability levels of $0, $500,000, $1,000,000, $1,500,000, and $2,000,000. PROFIT FROM PURCHASE OF COMPANY (Millions of dollars) 10 S 4 500000 1000000 1500000 2000000 2500000 ANNUAL COMPANY PROFIT (Dollars) Profit from Buying Company ?

The vice president has the option to purchase the company after five years. The purchase price for the company is set at 4 times earnings (profit), computed as average annual profitability over the next five years. In five years, the company is expected to be worth $10 million. On the following graph, use the green points (triangle symbols) to plot the vice president's expected profit from buying the company, for average annual profitability levels of $0, $500,000, $1,000,000, $1,500,000, and $2,000,000. PROFIT FROM PURCHASE OF COMPANY (Millions of dollars) 10 S 4 500000 1000000 1500000 2000000 2500000 ANNUAL COMPANY PROFIT (Dollars) Profit from Buying Company ?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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am. 121.

The vice president has the option to purchase the company after five years. The purchase price for the company is set at 4 times earnings (profit), computed as average annual profitability over the next five years. In five years, the company is expected to be worth $10 million. On the following graph, use the green points (triangle symbols) to plot the vice president's expected profit from buying the company, for average annual profitability levels of $0, $500,000, $1,000,000, $1,500,000, and $2,000,000. PROFIT FROM PURCHASE OF COMPANY (Millions of dollars) 10 S 4 500000 1000000 1500000 2000000 2500000 ANNUAL COMPANY PROFIT (Dollars) Profit from Buying Company ?
Transcribed Image Text:The vice president has the option to purchase the company after five years. The purchase price for the company is set at 4 times earnings (profit), computed as average annual profitability over the next five years. In five years, the company is expected to be worth $10 million. On the following graph, use the green points (triangle symbols) to plot the vice president's expected profit from buying the company, for average annual profitability levels of $0, $500,000, $1,000,000, $1,500,000, and $2,000,000. PROFIT FROM PURCHASE OF COMPANY (Millions of dollars) 10 S 4 500000 1000000 1500000 2000000 2500000 ANNUAL COMPANY PROFIT (Dollars) Profit from Buying Company ?
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