Andrew owns Hockey Plus, whose value is $150,000 today assuming normal growth. However, Andrew believes the value will grow at 1

Question

3 years ago

7

Andrew owns Hockey Plus, whose value is $150,000 today assuming normal growth. However, Andrew believes the value will grow at 1

5% per year for the next three years. He wants to take this rapid growth into consideration when valuing the business for a potential sale. Find the future value of the business in three years, then use that future value to find the present value at a rate of 6% compounded annually. $228,131.25 $178,652 $67,500 $191,543.56

Mathematics

1 answer:

Georgia [21] · Answer 1 · 2022-07-06T05:52:55+03:00

Georgia [21]3 years ago

4 0

Answer:

Future value will be $228,131.25 in three years

Present value of FV = $191,543.56

Step-by-step explanation:

FV = 150,000 (1 + 0.15)^3 = $228,131.25

Present value = Future value / (1+r/m)^mT

PV = 228,131.25 / (1+0.06)^3 = $191,543.56