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An investor can purchase a small business today for $313,650.00. The investor plans on holding the business for three years, and wants a 18.00% annual
An investor can purchase a small business today for $313,650.00. The investor plans on holding the business for three years, and wants a 18.00% annual return on his investment. He feels he can sell the business for $376,650.00 in three years. In addition, he also believes he can create an annual cash flow of $39,150.00 over the next three years from operating the business.
What is the value today of the expected cash flows from this investment? (This is the net value, so include the cost at year 0)
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