Question
Gerry is considering buying a small business that makes t-shirts. He plans on running the business for 17 years before selling it. He expects to
Gerry is considering buying a small business that makes t-shirts. He plans on running the business for 17 years before selling it. He expects to make $46,082 each semiannual period for the 17 years that he owns the business with his first $46,082 realized at the end of the first semiannual period. He has also contracted with 3 large events to make t-shirts that will generate cash flows of $18,693, $21,026, and $11,100 in 5 years, 9 years and 14 years respectively. At the end of year 17 he plans to sell the business of $168,324 after collecting the $46,082 in annual revenue. How much should he pay for the business if the interest rate is currently 13.66%
Not sure even where to begin with this question. It's a lot for me to handle. Can someone help me?
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