Reference no: EM133373172

Question: Fantasyfootball.net (FFN) is a privately held company that operates an online fantasy football website and publishes an annual magazine on fantasy football strategies. FFN has experienced significant growth in the industry and has recently received multiple offers to sell the business. The owners are considering these offers but also recognise that the fantasy football industry may be a fad that is currently at its peak and that technological advancements could lead to alternative platforms. They have determined that fantasy football companies generally sell for an average of two times revenues and four times net earnings. In reviewing their internal financial statements for the current year, they find that revenues are $975,00 and net earnings are $536,250. However, the internal financial statements still need to be finalised, as they have yet to consider the impact of several events that occurred during the year, including a contract with a retailer for the sale of annual magazines, the redesign of the magazine, and a website outage. These events may impact the company's revenues and net earnings and, therefore, the potential sale price of the business. What is the company's worth if the owner chooses to sell before correcting the transactions? I. $660,750 II. $1,538,250 III. $2,448,000 IV. $2,203,000