FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Lowell Technologies is considering the purchase of Andover Engineering. Lowell Tech believes that Andover Engineering can generate cash flows of $130,000, $135,000, and $142,000 over

image text in transcribed

Lowell Technologies is considering the purchase of Andover Engineering. Lowell Tech believes that Andover Engineering can generate cash flows of $130,000, $135,000, and $142,000 over the next three years, respectively. After that time, Lowell Tech feels that Andover Engineering will be worthless. Lowell Tech has determined that a 10.4% rate of return is applicable to this potential purchase. What is the fair price for Andover Engineering? (Hint: the value of the company is the PV of the future cash flows it generates) $334,048.12$342,611.19$348,917.40355471.26$365,210.88

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

Valuation Measuring and managing the values of companies

Valuation Measuring and managing the values of companies

Authors: Mckinsey, Tim Koller, Marc Goedhart, David Wessel

5th edition

978-0470424650, 9780470889930, 470424656, 470889934, 978-047042470

More Books

Students also viewed these Finance questions

Question

★★★★★
Explain the circumstances in which a liquidating corporation does not recognize gain and/or loss when making a liquidating distribution.

Answered: 1 week ago

Question

★★★★★
Show that the difference quotient for f(x) = cos x is given by

Answered: 1 week ago

Question

★★★★★
11. Suppose that Intel is considering building a new chipmaking factory. a. Assuming that Intel needs to borrow money in the bond market, why would an increase in interest rates affect Intels...

Answered: 1 week ago

Question

★★★★★
Marloweville, with 20,000 residents, is deciding how to finance the construction of a new municipal golf course that will enhance both recreation and tourism in the area. The construction cost of the...

Answered: 1 week ago

Question

★★★★★
Lowell Technologies is considering the purchase of Andover Engineering. Lowell Tech believes that Andover Engineering can generate cash flows of $130,000, $135,000, and $142,000 over the next three...

Answered: 1 week ago

Question

★★★★★
A realtor reviews a set of houses and determines that the median house price is $250,000 and the sample mean house price is $285,000. Upon reviewing the individual data point, she finds an error. A...

Answered: 1 week ago

Question

★★★★★
The tie rods in the press in Figure 3-3 are made of the steel alloy AISI 5160 OQT 900. Each rod has a diameter of 2.00 in and an initial length of 68.5 in. An axial tensile load of 40 000 lb is...

Answered: 1 week ago

Question

★★★★★
7. A volcano in Hawaii is erupting and is spewing rocks and debris at a speed of 880 ft/sec at an angle of 60 degrees from the horizontal forma height of 4091 feet. Will a rock thrown from the...

Answered: 1 week ago

Question

★★★★★
For this assignment, select the eight demographic variables and then select ten (10) of the 71 questions and report the frequency and descriptive statistics results with interpretations. 1. The first...

Answered: 1 week ago

Question

★★★★★
Dr. Bernice Maglin opened a medical practice specializing in physical therapy. During the first month of operation (January), the business, titled Dr. Bernice Maglin Professional Corporation (P.C.),...

Answered: 1 week ago

Question

★★★★★
Which statement correctly explains why sellers lower the quantity produced from Q subscript 1 to Q subscript 2 ? Because the price paid by consumers has fallen from P subscript 1 to P subscript P r...

Answered: 1 week ago

Question

★★★★★
=+ 4. Devoting a larger share of national output to investment would help restore rapid productivity growth and rising living standards. Do you agree with this claim? Explain, using the Solow model.

Answered: 1 week ago

Question

★★★★★
=+a calculator or a computer spreadsheet to show how the capital stock per worker will evolve over time in both countries. For each year, calculate income per worker and consumption per

Answered: 1 week ago

Question

★★★★★
=+ a. What is the immediate impact of the war on total output and on output per person?

Answered: 1 week ago

Previous Question Next Question