Discover the answers you need at Westonci.ca, a dynamic Q&A platform where knowledge is shared freely by a community of experts. Join our Q&A platform to connect with experts dedicated to providing precise answers to your questions in different areas. Get detailed and accurate answers to your questions from a dedicated community of experts on our Q&A platform.
Sagot :
The maximum amount of equity that he should invest in the company is $15,258,789
The maximum amount of equity =Sum of the Present Value of Cash flows Present Value of cash flow,
The maximum amount of equity=(Cash flow)/((1+i)^N) ,
i=Required Return,
i=25%=0.25 ,
N=Year of Cash Flow Base Year,
N =5 years,
Cash flow=$5,000,000
Equity is equal to total means minus its total arrears. These numbers can all be set up on a company's balance distance for a company. For a homeowner, equity would exist in the valuation of the habitat less any unsettled mortgage arrears or liens.
[tex]Equity = total assets-total liabilities[/tex]
The maximum amount of equity= [tex]Cash flow *(1+i)^{N}[/tex]
= $5,000,000*[tex](1+0.25)^{5}[/tex]
=$5,000,000*3.05175
=$15,258,789
Therefore, the maximum amount of equity that he should invest in the company is $15,258,789
To know more about the amount of equity:
https://brainly.com/question/26513242
#SPJ4
We appreciate your visit. Hopefully, the answers you found were beneficial. Don't hesitate to come back for more information. Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. Keep exploring Westonci.ca for more insightful answers to your questions. We're here to help.