You have invested in a company with the following statistics... a. Annual Revenue $2M b. Annual profit $400k (20% of revenues) c. Cost of Purchase

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You have invested in a company with the following statistics... a. Annual Revenue $2M b. Annual profit $400k (20% of revenues) c. Cost of Purchase $7M - all paid at the start. d. Annual Growth - 20% in both sales revenue and profit Question 1. What is the Present Value of this purchase over a period of 5 years. Your cost of money is 10% Question 2 - If you could purchase additional equipment (at the start) that cost $1.5M but would reduce annual costs by $250k. Would this purchase be worthwhile. - Worthwhile would mean that the return on the total investment after the sale in question 3 was increased... Question 3 - As the owner of the company, you would be responsible for losses, but you would also get to keep all profits. If you could sell this company at the end of 5 years for 4x annual revenue for the last year, what rate of return would you get on your investment? Question 4 - The tax man arrives - and you pay 25% of all profits for each of the 5 years. what does this do to the rate of return on the investment. You have invested in a company with the following statistics... a. Annual Revenue $2M b. Annual profit $400k (20% of revenues) c. Cost of Purchase $7M - all paid at the start. d. Annual Growth - 20% in both sales revenue and profit Question 1. What is the Present Value of this purchase over a period of 5 years. Your cost of money is 10% Question 2 - If you could purchase additional equipment (at the start) that cost $1.5M but would reduce annual costs by $250k. Would this purchase be worthwhile. - Worthwhile would mean that the return on the total investment after the sale in question 3 was increased... Question 3 - As the owner of the company, you would be responsible for losses, but you would also get to keep all profits. If you could sell this company at the end of 5 years for 4x annual revenue for the last year, what rate of return would you get on your investment? Question 4 - The tax man arrives - and you pay 25% of all profits for each of the 5 years. what does this do to the rate of return on the investment