You have successfully started and operated a company for the past 10 years. you have decided that it is time to sell your company and spend time on the beaches of hawaii. a potential buyer is interested in your company, but he does not have the necessary capital to pay you a lump sum. instead, he has offered $800,000 today and annuity payments for the balance. the first payment will be for $190,000 in three months. the payments will increase at 2.4 percent per quarter and a total of 20 quarterly payments will be made. if you require an ear of 11 percent, how much are you being offered for your company?

You are the owner of a local honda dealership. unlike other dealerships in the area, you take pride in your “no haggle” sales policy. last year, your dealership earned record profits of $1.5 million. however, according to the local chamber of commerce, your earnings were 10 percent less than either of your competitors. in your market, the price elasticity of demand for midsized honda automobiles is 4.5. in each of the last five years, your dealership has sold more midsized automobiles than any other honda dealership in the nation. this entitled your dealership to an additional 30 percent off the manufacturer’s suggested retail price (msrp) in each year. taking this into account, your marginal cost of a midsized automobile is $11,000. what price should you charge for a midsized automobile if you expect to maintain your record sales?