You are offered a business that has expected after-tax cash flows of $100,000 a

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Question

You are offered a business that has expected after-tax cash flows of $100,000 a year for the next 10 years, the time period for your investment horizon. You require a 15% return on similar risk investments. The owner will sell the business at a special price of $501,900 right now. You ____ consider this business because ____. (Points : 4)

would; it earns enough to meet your requirements

would; you want to own a business

both of the above

would not; you can spend more than that for this business so the price is low

would not; the asking price would not earn your required rate of return

Explanation / Answer

would; it earns enough to meet your requirements

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You are offered a business that has expected after-tax cash flows of $100,000 a

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You are offered a business that has expected after-tax cash flows of $100,000 a

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