Marko, Inc. is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $6,600, $11,600, and $17,800 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 13 percent is applicable to this potential purchase.
Required:
Question: What is Marko willing to pay today to buy ABC Co.?
- $39,420.00
- $24,876.50
- $28,896.22
- $36,000.00
- $27,261.50
Note: Please explain comprehensively and give step by step solution.