You want to purchase a business with the following cash flows:

You want to purchase a business with the following cash flows:

1. Year one          $100,000
2. Year two         $150,000
3. Year three       $200,000
4. Year four         $250,000

How much would you pay for this business today assuming you require a 14% return to make this deal? Explain.

year1234 rate of return NPV cash flow$ 100,000.00$ 150,000.00$ 200,000.00$ 250,000.00 14% $486,153.80 NPV(D8,D2:D5)