Sara owns a small business and plans on retiring in 5 years. Given his past experiences, she expects that the business will be worth $1,000,000 when she retires. However, Sara is willing to sell her business today for $850,000. Assuming the business is a viable ongoing activity, would this be a good investment (for the buyer) if the discount rate at 7%? Why or why not?
Sara owns a small business and plans on retiring in 5 years. Given his past experiences, she expects that the business will be worth $1,000,000 when she retires. However, Sara is willing to sell her business today for $850,000. Assuming the business is a viable ongoing activity, would this be a good investment (for the buyer) if the discount rate at 7%? Why or why not?
Chapter13: Comparative Forms Of Doing Business
Section: Chapter Questions
Problem 6DQ
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Sara owns a small business and plans on retiring in 5 years. Given his past experiences, she expects that the business will be worth $1,000,000 when she retires. However, Sara is willing to sell her business today for $850,000. Assuming the business is a viable ongoing activity, would this be a good investment (for the buyer) if the discount rate at 7%? Why or why not?
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