Question

"Joe just inherited the family business, and having no desire to run the family business, he...

"Joe just inherited the family business, and having no desire to run the family business, he has decided to sell it to an entrepreneur. In exchange for the family business, Joe has been offered an immediate payment of $100000. Joe will also receive payments of $10000 in one year, $10000 in two years, and $10000 in three years. The current market rate of interest for Joe is 10%. In terms of present value (PV), how much will Joe receive for selling the family business?Note: Express your answers in strictly numerical terms. For example, if the answer is $500, write enter 500 as an answer."

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Joe sell his family business

Immediately he received = $ 100000

At end of 1 year received = $ 10000

At the end of 2nd year recieved = $ 10000

At the end of 3rd year recieved = $ 10000

Interest rate =10%

year Amount recieved Present value factor

Present value (amount *pv factor)
0 100000 1 100000
1 10000 0.9090909091 9090.909091
2 10000 0.826446281 8264.46281
3 10000 0.7513148009 7513.148009
Total 124868.5199

* present value factor calculated as =1/(1+r)^n

So present value of business is $ 124868.51199

Answer = 124868.5199

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Thiago just inherited the family business, and, having no desire to run the family business, he...
Thiago just inherited the family business, and, having no desire to run the family business, he has decided to sell it to an entrepreneur. In exchange for the family business, Thiago has been offered an immediate payment of $100,000. Thiago will also receive payments of $50,000 in one year, $50,000 in two years, and $75,000 in three years. The current market rate of interest for Thiago is 6.0%. How much will Thiago receive for selling the family business?
Please read the article and answear about questions. Determining the Value of the Business After you...
Please read the article and answear about questions. Determining the Value of the Business After you have completed a thorough and exacting investigation, you need to analyze all the infor- mation you have gathered. This is the time to consult with your business, financial, and legal advis- ers to arrive at an estimate of the value of the business. Outside advisers are impartial and are more likely to see the bad things about the business than are you. You should...
JUST LIGHTING CASE STUDY ( Domestic and International Sourcing) Just lighting is an enterprise in London...
JUST LIGHTING CASE STUDY ( Domestic and International Sourcing) Just lighting is an enterprise in London Ontario which currently sells light fitting from various manufactures to a growing market of contractors and developers. It has grown from a $1 million turnover to a $5 million turnover organization. It does not have any borrowing or loans as it has a sound cash flow. Just lighting owns a facility comprising of an office block, a small warehouse and a large packing area...
Mattel Responds to Ethical Challenges Business Ethics This case was written by Debbie Thorne, John Fraedrich,...
Mattel Responds to Ethical Challenges Business Ethics This case was written by Debbie Thorne, John Fraedrich, O. C. Ferrell, and Jennifer Jackson, with the editorial assistance of Jennifer Sawayda. This case was developed for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative, ethical, or legal discussion by management. All sources used for this case were obtained through publicly available material. Mattel, Inc. is a world leader in the design, manufacture, and marketing of family...
QUESTION 1 ? What is the relationship between family dysfunction and schizophrenia? a. ?Research has substantiated...
QUESTION 1 ? What is the relationship between family dysfunction and schizophrenia? a. ?Research has substantiated a link between family dysfunction and schizophrenia but can't say which causes the other. b. ?Family dysfunction is a major causative factor for schizophrenia. c. ?Research has failed to substantiate a direct causal link between family dysfunction and schizophrenia. d. ?Family dysfunction plays a minor role in developing schizophrenia. 1.00000 points    QUESTION 2 ? Chuck has no life plan; he simply lives from...
COST ACCOUNTING Gizmos, Inc. incorporated and will begin operations on January 1, 2021. Its primary business...
COST ACCOUNTING Gizmos, Inc. incorporated and will begin operations on January 1, 2021. Its primary business is the manufacture and sale of gadgets. Because cash resources are limited, the company anticipates the need to have access to capital during the first year of operations and seeks to establish a line of credit with a local bank. The bank requires a complete operating and cash budget and pro-forma financial statements for 2021 as part of the loan application. The following information...
In narrative essay format, I want you to address a business/organization case study using multiple concepts...
In narrative essay format, I want you to address a business/organization case study using multiple concepts from class. The case question and case text begin on page 5 of this document. You need to demonstrate their best understanding of management and organizational behavior theory, and the application of those ideas to improve the understanding of various issues. You need to clearly identify at least 3 distinct, substantive issues. For each issue you need to 1), identify evidence from the case...
Buddies is a charitable organization that sponsors group activities and provides adult companionship for troubled youths...
Buddies is a charitable organization that sponsors group activities and provides adult companionship for troubled youths from single-parent families. Buddies screens, trains, motivates, and supervises the adult volunteers, who are paired with children referred by local agencies and by parents concerned with their children’s future. The organization provides a service that can augment any professional help a child may be receiving. But its main role is one of prevention by providing a meaningful adult relationship for a child before the...
QUESTION 1 1. Brianna is trying to increase her chances of being promoted to vice president...
QUESTION 1 1. Brianna is trying to increase her chances of being promoted to vice president by working to build good work relationships with other managers outside her own department. Brianna's behavior should be viewed as dysfunctional politics. functional politics. coercive power. functional influence. 2 points QUESTION 2 1. The Gingerbread Factory has a separate unit that makes their chocolate crunch cookies and another unit that is completely responsible for all operations in producing their ginger snap cookies. The Gingerbread...
In February 2012, the Pepsi Next product was launched into the US market. This case study...
In February 2012, the Pepsi Next product was launched into the US market. This case study provides students with an interesting insight into PepsiCo’s new product process and some of the challenging decisions that they faced along the way. Pepsi Next Case Study Introduction Pepsi Next was launched by PepsiCo into the US market in February 2012, and has since been rolled out to various international markets (for instance, it was launched in Australia in September 2012). The new product...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT