Joe Just Inherited the Family Business, and Having No Desire

question 35

Essay

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 (PV), how much will Joe receive for selling the family business?

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Definitions:

Epiblast Cells

The cells in the early embryo that give rise to all of the body's tissues and organs during development.

Germ Layer

One of three layers in the embryo (ectoderm, endoderm, or mesoderm) from which the four primary tissue types arise.

Implantation

The process by which a fertilized egg attaches itself to the lining of the uterus where it can then develop into a fetus.

Fundus

Bottom, or rounded end, of a hollow organ—for example, the fundus of the stomach or uterus.