Quote:
Originally Posted by wwkayaker
Sounds right from my knowledge of investing and business. Generally speaking, a person wants to buy a business with a price less than 10 times earnings.
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You need a Net Present Value determination.
To calculate the NPV, the first thing to do is determine the current value for each year's return and then use the expected cash flow and divide by the discounted rate.
Net Present Value (NPV) = Cash Flow / (1+rate of return) ^ number of time periods
I would maybe post more on it, but I swore to myself I would never utter those words ever again after completing corp finance. I'm getting anxiety thinking about it, actually.