Need help You want to purchase a business with thefollowing cash flows.Year 1 $100,000-Year 2 $150,000-Year 3 $200,000-Year 4 $250,000-How much would you pay for this business todayassuming you need a 14% return to make thisdeal?

Explanation; To determine the appropriate price to pay for a business given future cash flows, one…

Answered: You want to purchase a business with…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 1PA: Your company is planning to purchase a new log splitter for is lawn and garden business. The new...

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Sophie wants to buy the Ever-so-Young shop around the corner. The following cash flows are involved Time in years Cash flows (R) 2 200 000 3 -500 000 7 700 000 8 850 000 9 -210 000 Sophie can borrow money at 19% per annum while she can invest at 17,5% per annum. The present value of the cash outflows is a. R340 590,94. O b. R357 407,06. ○ c. R524 888,51. O d. R535 703,05.
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You want to purchase a business with the following cash flows. Year 1 $100,000 - Year 2 $150,000 - Year 3 $200,000 - Year 4 $250,000 - How much would you pay for this business today assuming you need a 14% return to make this deal?