Author Question: Comparing Costs and ReturnsYou and two of your friends are offered the chance to buy a bar. The ... (Read 596 times)

camac77 · **on:** Nov 23, 2022

Comparing Costs and Returns

You and two of your friends are offered the chance to buy a bar. The revenues from the bar have been steady at $120,000 a year for the past six years and are projected to remain steady in the future. The costs (not including opportunity costs) of operating the bar (including maintenance and repair, depreciation, and salaries) have also been steady at $70,000 a year. If five-year Treasury builds are currently yielding 4.75% interest, what is the maximum amount you will pay to buy the bar assuming any cash flows beyond year 5 are uncertain and therefore considered to be worth zero?
Please round your final answer to two decimal places.
◦ $250,000.00
◦ $217,978.05
◦ $600,000.00
◦ $523,147.31

annaelena92 · **Reply #1 on:** Nov 23, 2022

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