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    Purchasing Companies for Cash Flow

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    Marko, Inc. is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $5,000, $9,000, and $15,000 over the next three years, respectively. After that time, Marko feels ABC will be worthless. Marko has determined that a 14% rate of return is applicable to this potential purchase. What is Marko willing to pay today to buy ABC Co.?

    Please show your work to help me in problems such as these in the future. Thanks

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    Solution Summary

    This solution shows step-by-step calculations to determine what Marko Inc. is willing to pay today to buy ABC Co. with a applicable 14% rate of return. The expert examines Marko with a 14% rate of return applicable to potential purchase where Marko is willing to buy ABC co.