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A Corp. is considering purchasing a business. The business will require substantial initial improvements costing $400,000 that will be paid at the end of year
A Corp. is considering purchasing a business. The business will require substantial initial improvements costing $400,000 that will be paid at the end of year three. The business will not generate any cash flow until the end of the fourth year. It is expected to generate cash flows each year beginning at the end of the fourth year through the end of year eight of $150,000,$170,000, $120,000,$300,000, and $280,000 per year and, at the end of the seventh year it will be sold for $800,000. Interest is at 12%. What is maximum amount A Corp should be willing to invest for this business purchase
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