You want to purchase a business with the following cash flows. How much would you pay for this business today assuming you need a 14% return to make this deal?
a) First year- $150,000
b) Second year- $175,000
c) Third year- $225,000
d) Forth year- $275,000
E) How much would you pay for this business today assuming you needed a 18% return to make this deal? (Same problem as above.)
What type of problem is this?