1. If the owner reduces the earnings estimates from seven to five years, what effect will this have on the final valuation? If the individual increases the discount factor from 15 percent to 20-22 percent, what effect will this have on the final valuation?
2. How do the replacement value and liquidation value methods work? Why would the Isaacsons want to examine these methods?
3. If the Isaacsons conclude that the business is worth $410,000, what will be the final selling price, assuming a sale is made? Defend your answer.