TL Enterprises (TLE)is Considering Purchasing DMM

question 11

Multiple Choice

TL Enterprises (TLE) is considering purchasing DMM.DMM has expected cash flows of $42,800,$56,700,and $37,100 for the next 3 years,respectively.After that,the products DMM produces will be obsolete and thus DMM will be worthless.If TLE requires a return of 18 percent,what amount should they offer as a purchase price?

• A)$87,141.41
• B)$102,247.79
• C)$85,868.09
• D)$91,216.57
• E)$99,572.45

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Definitions:

Majority

Majority refers to more than half of a particular group or amount, often used to describe the requirement for decision-making in voting contexts.

Certificate of Authority

A document that grants a company the legal right to conduct business outside of its original state of registration.

Doing Business

This term refers to engaging in any activity or actions that constitute the operations and responsibilities of a business entity.

Abuse of Discretion

A legal term indicating a failure to take into proper consideration, the facts and law relating to a particular matter; an arbitrary or unreasonable departure from precedent and settled judicial custom.