Find (a) the future value of the business if it is to be continued and (b) what price should he sell his business at present if he chose to sell his business and still yield the same value in continuing his business?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter13: Investing In Mutual Funds, Etfs, And Real Estate
Section: Chapter Questions
Problem 9FPE
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Mr. Dilam Gawain believes his barber shop is worth
P200,000 and estimates that its value will grow at
10% per year compounded annually for the next 3
years. If he sells the business, the funds will be
invested at 8% compounded quarterly for 3 years.
Find (a) the future value of the business if it is to be
continued and (b) what price should he sell his
business at present if he chose to sell his business
and still yield the same value in continuing his
business?
Transcribed Image Text:Mr. Dilam Gawain believes his barber shop is worth P200,000 and estimates that its value will grow at 10% per year compounded annually for the next 3 years. If he sells the business, the funds will be invested at 8% compounded quarterly for 3 years. Find (a) the future value of the business if it is to be continued and (b) what price should he sell his business at present if he chose to sell his business and still yield the same value in continuing his business?
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