You are trying to assess the value of a small retail store that is up for sale. The
store generated a cash flow to its owner of $ 100,000 in the most year of
operation, and is expected to have growth of about 5% a year in perpetutity.
a)
If the rate of return required on this store is 10%, what would your
assessment be of the value of the store?
, b)
What would the growth rate need to be to justify a price of $ 2.5 million for this
store?