Cash inflows less cash outflows

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Reference no: EM13824183

Woody Light year is considering the purchase of a toy store from Andy Enterprises. Woody expects the store will generate net cash flows (cash inflows less cash outflows) of $50,000 per year for 10 years. At the end of the 10 years, he intends to sell the store for $500,000. To finance the purchase, Woody will borrow using a 10-year note that requires 7% interest.

Required:

What is the maximum amount Woody should offer Andy for the toy store? (Assume all cash flows occur at the end of each year.)

Reference no: EM13824183

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