You are a business broker that buys and sells businesses
You are a business broker that buys and sells businesses, contracts and legal settlements of various types. You use a 14% minimum required return for all transactions. You are thinking about making an offer to buy the rights to a structured settlement that is expected to pay $1 million a year at the end of years 1-5.
a.) What's the most you should pay to obtain the rights to these payments?
b.) Based on your answer to part a.), what might be a good first offer to make on the stream of payments?
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