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A prospective buyer is thinking about purchasing a small business. The following facts gave been gathered: The liquidations value of all assets minus liabilities is $200,000; the earning power desired is 20%; the prospective buyer needs a yearly salary of $20,000; the average earnings before subtracting the owner-managers salary and earning power is $40,000; and any extra earning power is estimated to be of value for 5 years. How much should the buyer be willing to pay for the business?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M91980991

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