10–17. Based on its growth prospects, a private investor values a local bakery at

$750,000. While wanting to own the operation, she intends to keep the current owner to manage the business. To do so, she wishes to purchase 50.1 percent ownership, with the current owner retaining the remaining equity.

Furthermore, she has no plans to change the way in which the business is managed or combine the business with any other operations. Based on recent empirical studies, she believes the appropriate liquidity discount is 20 percent.

What is the most she should be willing to pay for a 50.1 percent stake in the bakery?

Answer: $300,600.