Question: A company is considering purchasing a smart phone app designed to teach users how to play the guitar. The company believes that the app is
A company is considering purchasing a smart phone app designed to teach users how to play the guitar. The company believes that the app is going to generate $25,000 net cash flow in the first year, $20,000 in the second year, and $15,000 in year 3. After that, it will be worthless and replaced with other guitar apps. If the company requires a 10% return on all its investments, how much are they willing to pay for this app now?
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