Actually, I missed out some things... I'm a bit rusty on this (I do this kind of thing all by a spreadsheet I created, so I haven't thought about it in a while)....

I forgot to include the discount factor at the end....

That is, if in year 11 the business also makes $1000 per year (and will continue to do so in the foreseeable future), then if someone expects an 8% yearly return on their investment, this could in itself be worth $12,500 to them (since 8% of $12,500 is $1000).

So the total value in this case would be $10,000 (from the calculation in my previous post) + $12,500 (from the calculation above), making it $22,500.

This is very simplified because I've assumed no growth and no inflation, mainly to show the principles involved.... A more realistic evaluation would take growth and inflation into account.

- Dien