How much would you pay for this business today

Assignment Help Financial Management

Reference no: EM132071488

1. If you want to purchase a home. You have $25,000 to put down. All you can afford is $1500.00 per month and you do not want to finance for more than 15 years @ 4.5%. Your taxes will be $85.00 per month and insurance $60.00 a month. What is the amount you can pay for your home? (Show all your work)

2. You want to purchase a business with the following cash flows. How much would you pay for this business today? You need a 14% return to make this deal work. You will receive the cash at the end of the year?

a. First year $150,000

b. Second year $175,000

c. Third year $225,000

d. Forth year $275,000

3. How much would you pay for this business today assuming you need an 18% return to make this deal work? (Same problem as above.)

What type of a problem is this? _______________

Reference no: EM132071488

Questions Cloud

Determine is the power plant justifiable : Using sinking fund method for depreciation, determine is the power plant justifiable.

Wages expense and credit to wages payable : When the last day of the year falls on Tuesday, the entry for accrued wages is a debit to Wages Expense and a credit to Wages payable for 2.

Return on equity equals total sales divided by total equity : The financial statement that calculates EBIT over a period of time is the statement of cash flows. Return on equity equals total sales divided by total equity.

Deciding to extend credit to customer is working capital : Deciding to extend credit to a customer is a working capital decision. What was your annual salary be five years ago if you receive annual raises of 3.6%?

How much would you pay for this business today : You want to purchase a business with the following cash flows. How much would you pay for this business today?

What is the internal growth rate : A firm has an ROE of 27.5% and an ROA of 11%. What is the internal growth rate if the firm has a 55% dividend payout ratio?

Relate to working capital management decisions : Which of the following accounts does not relate to working capital management decisions?

Identify four hazard risks with the definition as described : Identify four “hazard risks” with the definition as described in Chapter 1.

Higher agency costs associated with excessive risk taking : It is possible that a lower expected cost of financial distress for Steinberg is offset by higher agency costs associated with excessive risk taking.

User Account

All Pages