Scrap metal has a market value of $80 per ton. A 25 year old oil tanker has 25,000 tons of metal It will cost you $125,000 to deliver the tanker to the scrap dealer The tanker is still usable and generates $155,000 after tax cash. It is assumed the tanker can be used for another 10 years (worthless on the last day 10 yrs from now) You are offered $1,750,000 for the tanker (today) Which valuation method has the most value, assuming a 15% retum required? 9 You start an engineering consulting firm. At the end of the first year, the cash flow of the firm is $75,000. The cash flow (net of all costs and expenses) grows at a rate of 15% per year In year 7, a national engineering firm offers to buy your local firm for 5 times cash flow What is the price the national firm will pay for your company