Suppose you started a Web site hosting business and then decided to return to university. Now…

Suppose you started a Web site hosting business and then decided to return to university. Now that you are back at university, you are considering selling the business within the next year. An investor has offered to buy the business for a guaranteed price of £300,000 whenever you are ready to sell. If the relevant discount rate for the cash flows is 10% which of the following three alternatives is the best choice? (a) Sell the business now. (b) Scale back the business and continue running it whilst you are at university for one more year, then sell the business at t = 1. The continual running of the business will require you to spend £50,000 on expenses today, t = 0 but generate a cash inflow of £60,000 at the end of the year, just before you sell the business. (c) Hire someone to manage the business while you are in university for one more year, then sell the business at t = 1. The continual running of the business will require you to spend £80,000 on expenses today, t = 0 but will generate a cash inflow of £150,000 at the end of the year, just before you sell the business.