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You are considering investing in a high end retail store located on South Beach. The store...

You are considering investing in a high end retail store located on South Beach. The store has a 10 year lease, which implies that it will remain in business for the next 10 years. It produced annual cash flows of $420,000 (after all expenses were deducted), and the discount rate to value similar businesses is 10%. Based on this information, what is the estimated value of the store?

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Answer #1
PVOrdinary Annuity = C*[(1-(1+i/100)^(-n))/(i/100)]
C = Cash flow per period
i = interest rate
n = number of payments
PV= 420000*((1-(1+ 10/100)^-10)/(10/100))
PV = 2580718.18
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