A Business Is Expected to Generate the Following Cash Flows $\begin{array}{ll}\text { Year }& \text { Cash Fiow } \\1 & \$ 10,000 \\2 & \$ 15,000 \\3 & \$ 30,000 \\4 & \$ 40,000\end{array}$

question 186

Multiple Choice

A business is expected to generate the following cash flows over the next five years after which it will be dissolved. How much is the business worth today if the interest rate is 8%? $\begin{array}{ll}\text { Year }& \text { Cash Fiow } \\1 & \$ 10,000 \\2 & \$ 15,000 \\3 & \$ 30,000 \\4 & \$ 40,000\end{array}$

• A) $77,615
• B) $68,304
• C) $75,333
• D) $100,025

---

Definitions:

Selling Price

The amount of money for which an item or service is sold in the market.

Operating Cash Flow

Represents the amount of cash generated by a company's normal business operations.

Interest Expense

The cost incurred by an entity for borrowed funds.

Tax Rate

The proportion of income or profits taken as tax by the government from an individual or company.