Purchase a business with the cash flows

Assignment Help Financial Management

Reference no: EM131020166

You want to purchase a business with the following cash flows. How much would you pay for this business today assuming you need a 14% return to make this deal?

a) First year- $150,000

b) Second year- $175,000

c) Third year- $225,000

d) Forth year- $275,000

E) How much would you pay for this business today assuming you needed a 18% return to make this deal? (Same problem as above.)

What type of problem is this?

Reference no: EM131020166

Questions Cloud

What will be the required return on portfolio : You have been managing a $5 million portfolio that has a beta of 1.05 and a required rate of return of 16%. The current risk-free rate is 5.75%. Assume that you receive another $500,000. If you invest the money in a stock with a beta of 1.00, what wi..

Lease the car or purchase it with a two-year loan : After deciding you want a new car, you can either lease the car or purchase it with a two-year loan. The car you want costs $34,000. The dealer has a special leasing arrangement where you pay $97 today and $497 per month for the next two years. If yo..

Proposed expansion of an existing subsidiary : You are evaluating a proposed expansion of an existing subsidiary located in Switzerland. The cost of the expansion would be Fr 15 million. The cash flows from the project would be Fr 4.1 million per year for the next five years. What is the NPV in d..

Discuss the four types of economic systems : Define and discuss the four types of economic systems. Give examples of countries that utilize these systems. Explain the possible effects of the systems upon the business environment in the countries you chose.

Purchase a business with the cash flows : You want to purchase a business with the following cash flows. How much would you pay for this business today assuming you need a 14% return to make this deal?

What is the bonds yield to maturity : A 15-year, 14% semiannual coupon bond with a par value of $1,000 may be called in 4 years at a call price of $1,075. The bond sells for $1,050. (Assume that the bond has just been issued.) What is the bond's yield to maturity? What is the bond's curr..

What should have been the exchange rate : The Argentine peso was fixed through a currency board at Ps1.00/$ throughout the 1990s. In January 2002, the Argentine peso was floated. On January 29, 2003, it was trading at Ps3.20/$. During that one-year period, Argentina’s inflation rate was 20% ..

How large will your retirement account : You are to make monthly deposits of $775 into a retirement account that pays 9.9 percent interest compounded monthly. Required: If your first deposit will be made one month from now, how large will your retirement account be in 30 years?

Original agreement had a binding arbitration clause : Virginia Cicle had a credit card with Chase Bank USA. The original agreement had a binding arbitration clause and class action waiver. In 2005, Chase sent a new agreement, and Cicle was given the choice of closing her account, but she used the card a..

User Account

All Pages