Present value of the business


You are offered an investment in a local business for $500,000, and told that the business can be sold after 1 year. After-tax cash flow from the sale of the business is estimated to be $600,000. If the opportunity cost of capital is 14 percent, what is the present value of the business (net of the original cash outflow of $500,000 today)?

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Finance Basics: Present value of the business
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