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You are asked by the Senior Management team of SOVA Endeavours to evaluate and prepare...

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Finance

You are asked by the Senior Management team of SOVA Endeavours to evaluate and prepare an analysis on the following 25 March 2021 offers for a private asset being held by SOVA.

Offer A - $100 million per year for initial 4 payments, $75 million per year for next 2 payments, $50 million per year for next 2 payments and $45 million per year for remaining 2 payments.

Offer B - $75 million per year for 10 payments.

Offer C - $125 million per year for initial 2 payments, $100 million per year next 4 payments, $20 million per year remaining 4 payments.

1. What are the biggest 'Risk Factors' underlying your valuations?

2. Which offer do you recommend to Senior Management to accept? Explain your recommendation rationale.

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