Redo problem 5 under the assumption that the tax rate is 40 percent, and the cost basis of the business is only \($10,000\). What will the net proceeds be after the payment of the debt and the taxes?

Data from problem 5

Redo problem 4 under the assumption that the firm has \($65,000\) in debt that must be paid off. What will the seller’s proceeds be from the sale of the business after paying off the debt, but before paying income taxes on the gain?

Data from in problem 4

A company has free cash flow: year 1, \($100,000;\) year 2, \($90,000;\) year 3, \($110,000;\) year 4, \($120,000;\) year 5, \($125,000;\) year 6 and beyond, \($125,000\).

The required rate of return on equity is 30 percent. What is the most a buyer should pay for this firm?