Homework Answers
| Current Price of ABC Co. is the present value of cash flow generated by company. | ||||||
| Year | Cash flow | Discount factor | Present Value | |||
| 1 | $ 8,000 | 0.8772 | $ 7,017.54 | |||
| 2 | $ 9,000 | 0.7695 | $ 6,925.21 | |||
| 3 | $ 15,000 | 0.6750 | $ 10,124.57 | |||
| Total | $ 24,067.32 | |||||
| Thus, Marko is willing to pay today to buy ABC $ 24,067.32 | ||||||
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