MrZhu Is Selling His Business for Retirement

Multiple Choice

Mr.Zhu is selling his business for retirement.It is expected that the cash flows from his business in each of next 5 years will be $500,000.At the end of the 5 years,the residual value of the business is expected to be $8 million.Mr.Zhu has his expected rate of return of 12.0% .What could be the closest estimate to his "fair market value" (of similar business) at which he would be willing to sell his business?

A) $6.34 million
B) $6.00 million
C) $5.80 million
D) $6.50 million