In: Finance
Southeastern travel is considering acquiring sunshine tour. management believes sunshine tour can generate cash flows of $157,000, $200,000, and $235,000 over the next three years, respectively. after that time, they feel the business will be worthless, Southeastern travel has determined that a 10.5 percent rate of return is applicable to this acquisition. what is southern travel willing to pay today to acquire sunshine tour?
southern travel willing to pay today to acquire sunshine tour | 480,051.34 | |||
Statement showing Cash flows | ||||
Particulars | Time | PVF 10.5% | Amount | PV |
CashFlows | 1.00 | 0.9050 | 157,000.00 | 142,081.45 |
CashFlows | 2.00 | 0.8190 | 200,000.00 | 163,796.81 |
CashFlows | 3.00 | 0.7412 | 235,000.00 | 174,173.08 |
Present value of CashFlows | 480,051.34 |