Question

If the present value of the expected future cash flows represented the company market value today; what should your company be willing to pay today for the business? assumeyour company has other opportunities to invest money today andin the future at a nominal 10% interest rate compounded annually?

Answer 1

PW = FW×(1 + i)^-N

where PW is present worth
where FW is future worth
where i is nominal interest rate compounded annually
where N is period in years