Question: Please show work - answer given Based on its growth prospects, a private investor values a local bakery at $750,000. She believes that cost savings
Please show work - answer given
Based on its growth prospects, a private investor values a local bakery at $750,000. She believes that cost savings having a PV of $50,000 can be achieved by changing staffing levels and store hours. She believes the appropriate liquidity discount is 20%. A recent transaction in the same city required the buyer to pay a 5% premium to the averageprice for similar businesses to gain a controlling interest in a bakery. What is the most she should be willing to pay for a 50.1% stake in the bakery? Answer: $336,672.
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