Cash in Hand, Now or LaterComing Up Roses has grown into a very successful business and you have justreceived an offer from someone to purchase the business from you for $1.2million. The potential buyer has offered you $400,000 at the time of sale,$600,000 at the end of the growing season, in 6 months, and the balance, $200,000in 1.5from now.years1. What is the present value of this offer if you could invest at 6%compounding monthly?2. If another buyer offered you $1,175,000 cash right now, which is the betterdeal? Why?3. You have decided to accept the first offer, but will charge the buyer intereston the second and third payments. You will charge 6% interest,compounded monthly. Calculate the second and third payment.

We will use the XNPV function. We will apply the XNPV formula where the inflows anad dates are…

Coming Up Roses has grown into a very successful business and you have just received an offer from someone to purchase the business from you for $1.2 million. The potential buyer has offered you $400,000 at the time of sale, $600,000 at the end of the growing season, in 6 months, and the balance, $200,000 in 1.5 years from now. 1. What is the present value of this offer if you could invest at 6% compounding monthly? 2. If another buyer offered you $1,175,000 cash right now, which is the better deal? Why? 3. You have decided to accept the first offer, but will charge the buyer interest on the second and third payments. You will charge 6% interest, compounded monthly. Calculate the second and third payment.

Coming Up Roses has grown into a very successful business and you have just received an offer from someone to purchase the business from you for $1.2 million. The potential buyer has offered you $400,000 at the time of sale, $600,000 at the end of the growing season, in 6 months, and the balance, $200,000 in 1.5 years from now. 1. What is the present value of this offer if you could invest at 6% compounding monthly? 2. If another buyer offered you $1,175,000 cash right now, which is the better deal? Why? 3. You have decided to accept the first offer, but will charge the buyer interest on the second and third payments. You will charge 6% interest, compounded monthly. Calculate the second and third payment.

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter12: Corporate Valuation And Financial Planning

Section: Chapter Questions

Problem 7P: Upton Computers makes bulk purchases of small computers, stocks them in conveniently located...

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