Question
ou have successfully started and operated a company for the past 10 years. You have decided that it is time to sell your company and
ou have successfully started and operated a company for the past 10 years. You have decided that it is time to sell your company and spend time on the beaches of Hawaii. A potential buyer is interested in your company, but he does not have the necessary capital to pay you a lump sum. Instead, he has offered $500,000 today and annuity payments for the balance. The first payment will be for $270,000 in three months. The payments will increase at 1.4% per quarter and a total of 30 quarterly payments will be made.
If you require an EAR of 13%, how much are you being offered for your company?
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