Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Oxford Handbook Of IPOs

Authors: Douglas Cumming, Sofia Johan

1st Edition

0190614579, 978-0190614577

More Books

Students also viewed these Finance questions

Question

What is a verb?

Answered: 1 week ago

Question

6. How do histories influence the process of identity formation?

Answered: 1 week ago