Question
You and your partner from college started a new business venture that consists of a health and athletic club to promote a healthier lifestyle. Your
You and your partner from college started a new business venture that consists of a health and athletic club to promote a healthier lifestyle. Your accountant estimates that the firm generated $650,000 in cash flows during the previous year, and the appropriate discount rate to value firms in this sector is 11%. The firms cash flows are expected to grow by 5% (which includes 3% for expected inflation). Since the business is a corporation, it is expected to continue operating indefinitely into the future. Based on this information, what is the value of the business?
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