Calculating Net Present Value/Discounted Cash Flows for Business Valuation Hutspa Contracting Co. is considering purchasing a Dixon Co., a small business located within Hutspas service area to reduce their competition in the HVAC services business. The owner of Dixon is willing to sell to Hutspa for the asking price of $360,000.

Dixon Co. will generate cash flows of $62,650 per year for eight years. Assuming the discount rate is 6%, is the asking price from Dixon Co. fair? What advice would you give Hutspa regarding this prospective purchase?

Please provide a detailed explanation related to the advice you are giving Hutspa.