MrZhu Is Selling His Business for Retirement

question 18

Multiple Choice

Mr.Zhu is selling his business for retirement.It is expected that the cash flows from his business in each of next 5 years will be $500,000.At the end of the 5 years,the residual value of the business is expected to be $8 million.Mr.Zhu has his expected rate of return of 12.0% .What could be the closest estimate to his "fair market value" (of similar business) at which he would be willing to sell his business?

• A) $6.34 million
• B) $6.00 million
• C) $5.80 million
• D) $6.50 million

---

Definitions:

Retroactive Interference

A memory problem that occurs when newly learned information interferes with the recall of previously learned information.

Retrograde Amnesia

A loss of memory-access to events that occurred, or information that was learned, before an injury or the onset of a disease.

Anterograde Amnesia

A condition characterized by an inability to form new memories following the onset of an amnesia-causing event, though long-term memories from before the event may remain intact.

Declarative Memory

A type of long-term memory that involves the capacity to recall factual information, such as events, facts, and concepts.