You have successfully started and operated a company for the past 10 years. You have decided that it is time to sell your company and spend time on the beaches of Hawaii. A potential buyer is interested in your company, but he does not have the necessary capital to pay you a lump sum. Instead, he has offered $500,000 today and annuity payments for the balance. The first payment will be for $160,000 in three months. The payments will increase at 1.6% per quarter and a total of 20 quarterly payments will be made. If you require an EAR of 8%, how much are you being offered for your company? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Value of offer
You have successfully started and operated a company for the past 10 years. You have decided that it is time to sell your company and spend time on the beaches of Hawaii. A potential buyer is interested in your company, but he does not have the necessary capital to pay you a lump sum. Instead, he has offered $500,000 today and annuity payments for the balance. The first payment will be for $160,000 in three months. The payments will increase at 1.6% per quarter and a total of 20 quarterly payments will be made. If you require an EAR of 8%, how much are you being offered for your company? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Value of offer
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:You have successfully started and operated a company for the past 10 years. You have decided that it is time to sell your company and
spend time on the beaches of Hawaii. A potential buyer is interested in your company, but he does not have the necessary capital to
pay you a lump sum. Instead, he has offered $500,000 today and annuity payments for the balance. The first payment will be for
$160,000 in three months. The payments will increase at 1.6% per quarter and a total of 20 quarterly payments will be made.
If you require an EAR of 8%, how much are you being offered for your company? (Do not round intermediate calculations. Round
your answer to 2 decimal places, e.g., 32.16.)
Value of offer
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