John and Sally Claussen are contemplating the purchase of a hardware store from John Duggan The Claussens anticipate that the store will generate cash flows of $82,000 per year for 20 years At the end of 20 years, they intend to sell the store for an estimated $520,000 The Claussens will finance the investment with a variable rate mortgage Interest rates will increase twice during the 20 year life of the mortgage Accordingly, the Claussens desired rate of return on this investment varies as follows Years 15 7 Years 610 9 Years 1120 11 Required What is the maximum amount the Claussens should pay John Duggan for the hardware store (Assume that all cash flows occur at the end of the year ) (Use PV of $1 Table 2 and PVA of $1 Table 4 ) (Round PV Factors to 5 decimal places, intermediate and final answer to the nearest dollar amount ) John and Sally Claussen are contemplating the purchase of a hardware store from John Duggan The Claussens anticipate that the store will generate cash flows of $82,000 per year for 20 years At the end of 20 years, they intend to sell the store for an estimated $520,000 The Claussens will finance the investment with a variable rate mortgage Interest rates will increase twice during the 20 year life of the mortgage Accordingly, the Claussens desired rate of return on this investment varies as follows Required What is the maximum amount the Claussens should pay John Duggan for the hardware store (Assume that all cash flows occur at the end of the year ) (Use PV of $1 Table 2 and PVA of $1 Table 4) (Round PV Factors to 5 decimal places, intermediate and final answer to the nearest dollar amount )

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Posted on Sep 17, 2024

John and Sally Claussen are contemplating the purchase of a hardware store from John Duggan. The Claussens anticipate that the store will generate cash flows

John and Sally Claussen are contemplating the purchase of a hardware store from John Duggan. The Claussens anticipate that the store will generate cash flows of $82,000 per year for 20 years. At the end of 20 years, they intend to sell the store for an estimated $520,000. The Claussens will finance the investment with a variable rate mortgage. Interest rates will increase twice during the 20-year life of the mortgage. Accordingly, the Claussens desired rate of return on this investment varies as follows: Years 15 7 % Years 610 9 % Years 1120 11 % Required: What is the maximum amount the Claussens should pay John Duggan for the hardware store? (Assume that all cash flows occur at the end of the year.) (Use PV of $1 "Table 2" and PVA of $1 "Table 4") (Round "PV Factors" to 5 decimal places, intermediate and final answer to the nearest dollar amount.)

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John and Sally Claussen are contemplating the purchase of a hardware store from John Duggan. The Claussens anticipate that the store will generate cash flows of $82,000 per year for 20 years. At the end of 20 years, they intend to sell the store for an estimated $520,000. The Claussens will finance the investment with a variable rate mortgage. Interest rates will increase twice during the 20-year life of the mortgage. Accordingly, the Claussens desired rate of return on this investment varies as follows:Required: What is the maximum amount the Claussens should pay John Duggan for the hardware store? (Assume that all cash flows occur at the end of the year.) (Use PV of $1 Table 2 and PVA of $1 Table 4) (Round PV Factors to 5 decimal places, intermediate and final answer to the nearest dollar amount.)