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A ezto.mheducation.com C ch17 : ACCOUNTING 303 : West Chester University : Notes | Course Hero Connect HW Ch 05 i Saved Help Save & Exit Submit You received partial credit in the previous attempt. View previous attempt 6 Problem 5-5 (Algo) Investment decision; varying rates [LO5-3, 5-8] 14.28 John and Sally Claussen are considering the purchase of a hardware store from John Duggan. The Claussens anticipate that the store points will generate cash flows of $87,000 per year for 20 years. At the end of 20 years, they intend to sell the store for an estimated $570,000. The Claussens will finance the investment with a variable rate mortgage. Interest rates will increase twice during the 20- year life of the mortgage. Accordingly, the Claussens' desired rate of return on this investment varies as follows: (FV of $1, PV of $1, EVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) eBook Years 1-5 78 Years 6-10 9% Print Years 11-20 118 Required: References What is the maximum amount the Claussens should pay John Duggan for the hardware store? (Assume that all cash flows occur at the end of the year.) (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) PV of $87,000 cash PV of $570,000 Maximum paid for flow selling price store Years 1-5 $ 356,700 Years 6-10 220, 110 Years 11-20 180,090 Year 20 Total $ 756,900 + 756,900 Mc Graw ducation