Several years ago, your firm paid $ 25,000,000 for Clean Tooth, a small, high- technology company that
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Estimated cash receipts, next 10 years $ 500,000/ year
Estimated cash expenditures, next 10 years $ 450,000/ year
Current offer for the division from another firm $ 250,000
Assume
1. The firm is in the 0 percent tax bracket (no income taxes).
2. There are no additional expenses associated with the sale.
3. After year 10, the division will have sales (and expenses) of 0.
4. Estimates are completely certain. Should the firm sell the division for $ 250,000?
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Related Book For
Accounting for Decision Making and Control
ISBN: 978-0078025747
8th edition
Authors: Jerold Zimmerman
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