Question
Southern Tours is considering acquiring Holiday Vacations. Management believes Holiday Vacations can generate cash flows of $218,000, $224,000, and $238,000 over the next three years,
Southern Tours is considering acquiring Holiday Vacations. Management believes Holiday Vacations can generate cash flows of $218,000, $224,000, and $238,000 over the next three years, respectively. After that time, they feel the business will be worthless. If the required return on the Holiday Vacations cash flows is 16.4 percent, should Southern Tours pay $515,000 to purchase Holiday Vacations? Group of answer choices No, the present value of Holiday Vacactionss cash flows ($503,521.56) < $515,000 No, the present value of Holiday Vacactionss cash flows ($529,635.96) > $515,000 Not enough information to answer this problem Yes, the present value of Holiday Vacactionss cash flows ($503,521.56) < $515,000 Yes, the present value of Holiday Vacactionss cash flows ($529,635.96) > $515,000
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