Question
Carolyn is considering purchasing a small internet franchise business and plans to sell it before she begins grad school in 2025. She expects to make
Carolyn is considering purchasing a small internet franchise business and plans to sell it before she begins grad school in 2025. She expects to make $40,000 in 2023 $40,000 in 2024 and sell it in 2024 She can borrow the money to pay for the franchise at 8% interest. What is the most she should be willing to pay for this license? (You may assume the business generates an income stream of $40,000 each year beyond the time she owns it. You may also assume the interest rate remains constant at 8%). Hint: Let P be the amount she expects to sell it in 2024. Remember, this is in terms of 2024 dollars, so you must put it in present value (2022) dollar terms).
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