Oct 10, 2017
2:34:26pm
2:34:26pm
Option 1 is correct IMO
Option 3 doesn't really matter because the seller should not sell at that price. Selling something for $1MM that generates cash flows of $3MM would be dumb.
You should definitely be willing to pay $5MM because that is the intrinsic value to you at your required rate of return. If you require a 25% return, then that is reflected in getting to the $5MM number. Anything you pay less than that amount is gravy.
At the end of the day, the seller should be willing to sell at $3MM and you should be willing to pay up to $5MM. You both benefit by anything in between.
Thoughts?
You should definitely be willing to pay $5MM because that is the intrinsic value to you at your required rate of return. If you require a 25% return, then that is reflected in getting to the $5MM number. Anything you pay less than that amount is gravy.
At the end of the day, the seller should be willing to sell at $3MM and you should be willing to pay up to $5MM. You both benefit by anything in between.
Thoughts?
- Previous username
- HawkeyeCoug14
- New username
- Odysseus
- Bio page
- Ulysses14
- Joined
- Oct 28, 2014
- Last login
- May 17, 2018
- Total posts
- 0 (0 FO)
