Problem 6.68 – Selling Your Company, Lump Sum Today, and Growing Annuity

Fundamentals of Corporate Finance

Ross, Westerfield, and Jordan

13th Edition

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Difficulty – Medium

Determine the total value of a proposed offer for your company, where the buyer offers an initial lump sum payment and a series of increasing annuity payments over a specific number of quarters. The first payment will be made after a certain period, and the payments will increase by a specific percentage per quarter. Given that you require a certain effective annual rate, calculate the total amount you are being offered for your company.

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