You Are Considering the Purchase of a Business That Produces

question 42

Multiple Choice

You are considering the purchase of a business that produces net cash flows of $350,000 per year in perpetuity.In a perfectly competitive market,what should be the asking price for the business if the firm's cost of capital is 15%?

• A) $350,000
• B) $3,050,000
• C) $2,333,333
• D) none of the above

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Definitions:

Proto-Language

The hypothetical most recent common ancestor of a group of languages that formed from its dialects.

Innate Basis

An inherent or natural underlying foundation or tendency, often referring to abilities or instincts present from birth.

Grammar

The system of rules that determine how our thoughts can be expressed.

Egocentric Speech

Speech used by children, in which they talk about themselves and their perspective, often without regard for the listener's understanding or viewpoint.