After that time they feel the business will be worthless


Marko, Inc. is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $6,300, $11,300, and $17,500 over the next three years, respectively. After that time, they feel the business will be worthless. Marko has determined that a rate of return of 11 percent is applicable to this potential purchase. What is Marko willing to pay today to buy ABC Co.?

$29,075.40
$25,743.86
$37,732.50
$27,642.86
$35,100.00

 

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Finance Basics: After that time they feel the business will be worthless
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