Ask Question
15 April, 05:42

If a business buyer estimates that 20 percent is a reasonable rate of return for an existing business expected to produce a profit of $27,000, its capitalized value would be

+4
Answers (1)
  1. 15 April, 06:06
    0
    To solve this problem let us recall that the formula for profit is:

    Profit = (Rate of return) * (Capital value)

    Rewriting this in terms of Capital value:

    Capital value = Profit / Rate of return

    Substituting the given values:

    Capital value = $27,000 / 0.20

    Capital value = $135,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “If a business buyer estimates that 20 percent is a reasonable rate of return for an existing business expected to produce a profit of ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers