A small business venture has tangible assets of RM 660,000, liabilities of RM 40,000 and produces a net profit of RM 45,000 p. based on a turnover of...

A small business venture has tangible assets of RM 660,000, liabilities of RM 40,000 and produces a net profit of RM 45,000 p.a. based on a turnover of RM 490,000. The business has a ROI of 7% and the multiplier used is 1.4. Intangible assets are valued at RM 30,000.

a. Calculate the purchase price for this enterprise using each of these methods:

1.           book (asset) value
2.           market value (revenue multiplier)
3.           return on investment

b. Discuss the most appropriate mechanism to determine the value of a business venture for seller and buyer respectively.