Discuss Some of the Potential Pitfalls of Buying an Existing

question 30

Essay

Discuss some of the potential pitfalls of buying an existing business that might be detrimental to your business idea.

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Definitions:

NPV

A financial analysis approach that determines the present value of an investment's expected cash flows minus its initial cost, used to evaluate the attractiveness of projects.

Net Income

The net income of a company, calculated by deducting all costs and taxes from its total revenues.

Accounting Break-Even

The sales level that results in zero project net income.

Forecasting Risk

The possibility that errors in projected cash flows lead to incorrect decisions.