Tony owns a small business that he is attempting to sell. A potential buyer offers him $500,000

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Tony owns a small business that he is attempting to sell. A potential buyer offers him $500,000 today, plus $1,500,000 two years from now and a balance of $1,700,000 three years from now. Tony always analyzes cash flows using a rate of 4% compounded annually. To compare this to other offers, which would be paid in cash immediately, he wants to know the present value of these future cash flows. Show the calculation and solution that you would present to Tony to use in his decision.

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Principles Of Finance

ISBN: 9798439388899

1st Edition

Authors: Julie Dahlquist, Rainford Knight

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