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 $22,141 each semiannual period for the 17 years that he owns the business with his first $22,141 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 $19,647, $23,331, and $13,316 in 7 years, 9 years and 14 years respectively. At the end of year 17 he plans to sell the business of $187,093 after collecting the $22,141 in annual revenue. How much should he pay for the business if the interest rate is currently 10.4%

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

Finance And Sustainability

Authors: William Sun, Celine Louche, Roland Perez

1st Edition

1780520921, 978-1780520926

More Books

Students also viewed these Finance questions