Question
Hannah is evaluating whether to purchase a small business. Hannah requires an IRR of 9%. The investment will cost $50,000 initially, and will generate after-tax
Hannah is evaluating whether to purchase a small business. Hannah requires an IRR of 9%. The investment will cost $50,000 initially, and will generate after-tax cash flows of $7,000 per year for 7 years. Due to the type of business, Hannah is likely to receive an additional positive cash flow amount in the 7th year (over and above the $7,000). After 7 years, the business ends and will be worthless. What must the minimum additional after-tax cash flow be for Hannah to even consider purchasing the business? options: a) $14,770 b) $1,828 c) $1,000 d) $27,000
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