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Andrej [43]
2 years ago
13

You want to start a business that you believe can produce cash flows of $44,000, $61,000, and $80,000 at the end of each of the

next three years, respectively. At the end of three years you think you can sell the business for $200,000. At a discount rate of 9.7 percent, what is this business worth today
Business
1 answer:
madam [21]2 years ago
5 0

The present worth of this business it has been calculated is given as $302,898.

How to solve for the worth of the business

<u>In the first year</u>

Cash flow = 44000

PVF at 9.7% = 0.91158

The present value = 0.91158 * 44000

= $40106

<u>In the second year </u>

Cash flow =  $61,000,

PVF at 9.7%  = 0.83097

The present value = $50689.17

<u>In the third year</u>

Cash flow = $80,000

PVF at 9.7% = 0.7575

The present value = $60600

<u>In the 4th year </u>

Cash flow = $200,000

PVF at 9.7% = 0.7575

The present value = $151,500

The worth of the business today is going to be the sum of all the present values

=  $151,500 + $60600 +  $40106.52 + $50689.17

= $302,898

Read more on present value here: brainly.com/question/20813161

#SPJ1

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which of the following is true about product life cycles? group of answer choices a reminder promotion is normally used in the i
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Based on business strategies and production, the statement that is true about product life cycles is "Early adopters buy in the introductory phase."

<h3>What is the Life Cycle of a Product</h3>

The life cycle of a product is a term that is used to describe the proportion of time a product goes from being introduced into the market by the producers until it's taken off the shelve.

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<h3>The Life cycle of a product is the following:</h3>
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Generally, the in the introduction stage of a product's life the early adopters are the first category of consumers that try new products before most other consumers key into it.

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8 0
1 year ago
MC Qu. 90 A company is planning to purchase... A company is planning to purchase a machine that will cost $30,600 with a six-yea
faltersainse [42]

Answer:

Accounting rate of return = 20.53%

Explanation:

<em>The accounting rate of return is the average annual income expressed as a percentage of the average investment.</em>

The simple rate of return can be calculated using the two formula below:

Accounting rate of return

= Annual operating income/Average investment × 100

Average investment = (Initial cost + scrap value)/2

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Accounting rate of return = ( 3080/15,000) × 100 = 20.53%

Accounting rate of return = 20.53%

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