A small business, Company A, believes it can generate an income stream of $120,000 per year for

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A small business, Company A, believes it can generate an income stream of $120,000 per year for the next 20 years. A larger firm, Company B, offers to purchase Company A for a lump sum of $2 million today. With a continuous interest rate of 2% per year, is this a reasonable deal for Company A? For Company B? Explain in terms of present value.

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Applied Calculus

ISBN: 9781119275565

6th Edition

Authors: Deborah Hughes Hallett, Patti Frazer Lock, Andrew M. Gleason, Daniel E. Flath, Sheldon P. Gordon, David O. Lomen, David Lovelock, William G. McCallum, Brad G. Osgood, Andrew Pasquale

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A small business, Company A, believes it can generate an income stream of $120,000 per year for

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The present value of an income stream of 120000 per year at 2 per year for 20 yea...View the full answer

Applied Calculus

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