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1. (15 marks) The Green Company wants to set up a landscaping business. According to the CFO Art Shrub, this business shows a lot of
1. (15 marks) The Green Company wants to set up a landscaping business. According to the CFO Art Shrub, this business shows a lot of promise. Art estimates that the business will generate free cash flow in year one of $120,000 (net), and the cash flows are estimated to grow 5% every year, forever. The business requires an upfront investment of $1,600,000. If Green requires a 10% return on its investment, should the landscaping business be undertaken? b. Art is unsure about the 5% growth rate in its cash flows. At what growth constant rate would the company just break even if it required a 10% return on investment? a
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