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1 3 You are interested in purchasing a business. Current owner of the business is asking $750,000. You estimated that you can borrow a 15-year
1 3 You are interested in purchasing a business. Current owner of the business is asking $750,000. You estimated that you can borrow a 15-year term loan at 5% interest. You expect 18% return from this project. Current owner opened up the books and you estimated future cash flows. You also estimated that you would be able to sell the business for about $1,100,000 at the end of year 10. Year EBITDA 75,000 2 78,000 81,000 84,000 87,000 92,000 97,000 102,000 107,000 112,000 4 5 6 7 00 9 10 You will use straight-line depreciation method to depreciate total value of the assets, which is $750,000. Assets have 30-year useful life and no salvage value. What will be the annual depreciation? Select one: a. 37,500 b. 50,000 C. 43,750 d. 25,000
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