Jeff€™s Powerwash Inc. which operates in Texas, is considering acquiring Frank€™s Superior Carworks chain of car washes in Maryland. The expected net cash flows from the acquisition for the first 3 years of the postmerger period follow. After 3 years, the net cash flows are expected to grow at a constant rate of 4 percent per year. If the appropriate discount rate is 10 percent, what is the most Jeff€™s Powerwash should pay for Frank€™s Superior Carworks?

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Year 2 Year 1 Year 3 Net cash flows $550,000 $650,000 $750,000