Question
You are trying to assess the value of a small retail store that is up for sale. The store generated a cash flow to
You are trying to assess the value of a small retail store that is up for sale. The store generated a cash flow to its owner of $ 100,000 in the most year of operation, and is expected to have growth of about 5% a year in perpetuity. a- If the rate of return required on this store is 10%, what would your assessment be of the value of the store? b- What would the growth rate need to be to justify a price of $2.5 million for this store?
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a To assess the value of the store we can use the Gordon Growth Model also known as the dividend dis...Get Instant Access to Expert-Tailored Solutions
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Financial Reporting Financial Statement Analysis And Valuation A Strategic Perspective
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
9th Edition
1337614689, 1337614688, 9781337668262, 978-1337614689
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