You are interested in purchasing an existing retail business. You are interested in a laundromat that holds no debt and currently generates $100,000 in profit per year. The profit that is generated is directly tied to the amount of foot traffic on the main street, so it is safe to assume that population growth can be tied to the profit for the business. This business is in an area whose population has grown at 5% for each of the past ten years, and according to census data this growth is expected to continue for at least the next ten years.

In order to invest in this business, you have to withdraw money from an investment account that has returned 10% each year for the past ten years.If you assume that you would like to own this business for the next ten years, how much is this business worth to you? That is to say, what is the most that you should be willing to pay for this business?