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question 39

Essay

Use the information for the question(s)below.
Joe just inherited the family business,and having no desire to run the family business,he has decided to sell it to an entrepreneur.In exchange for the family business,Joe has been offered an immediate payment of $100,000.Joe will also receive payments of $50,000 in one year,$50,000 in two years,and $75,000 in three years.The current market rate of interest for Joe is 6%.
-In terms of present value,how much will Joe receive for selling the family business?

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Definitions:

Resource Supplies

The availability of materials, goods, or services that can be used to support life, industry, or economic activity.

Replacement-level Fertility

The fertility rate that maintains a population's size across generations, usually about 2.1 children per woman in most developed countries.

Average Replacement-level

The fertility rate at which a population exactly replaces itself from one generation to the next, without migration.

Actual Average

The true or exact mean calculated from a set of data, as opposed to an estimated or theoretical average.