Marko, Inc. is considering the purchase of ABC Co. Marko believes that ABC Co. c
ID: 2649028 • Letter: M
Question
Marko, Inc. is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $6,500, $11,500, and $17,700 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 12 percent is applicable to this potential purchase. What is Marko willing to pay today to buy ABC Co.?
$38,734.50
$29,109.63
$27,569.81
$35,700.00
$25,415.81
You borrow $6,930 to buy a car. The terms of the loan call for monthly payments for 5 years a rate of interest of 6 percent. What is the amount of each payment?
$98.78
HELP PLEASE!
You borrow $6,930 to buy a car. The terms of the loan call for monthly payments for 5 years a rate of interest of 6 percent. What is the amount of each payment?
$127.32 $99.33 $128.80 $133.98$98.78
HELP PLEASE!
Explanation / Answer
Answer: Marko is willing to pay today to buy ABC Co is $27569.81.
Answer: Calculation of amount of each payment:
Use present value of an annuity formula: PV = C(1
Particulars Time PVF (12%) Amount($) PV($) Cash Flow 1 0.892857 6500 5803.571 2 0.797194 11500 9167.731 3 0.71178 17700 12598.51 P.V.C.O 27569.81