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Southeastern travel is considering acquiring sunshine tour. management believes sunshine tour can generate cash flows of $157,000,...

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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 beworthless, Southeastern travel has determined that a 10.5 percentrate of return is applicable to this acquisition. what is southerntravel willing to pay today to acquire sunshine tour?

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3.8 Ratings (351 Votes)

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

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Transcribed Image Text

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 beworthless, Southeastern travel has determined that a 10.5 percentrate of return is applicable to this acquisition. what is southerntravel willing to pay today to acquire sunshine tour?

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