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A firm with a 1 , 0 0 0 stockholders plans to terminate operations at the end of two years. Investors are certain that the

A firm with a 1,000 stockholders plans to terminate operations at the end of two years. Investors are certain that the firm will generate cash flows of $1,000 at the end of the first year and $50,000 at the end of the second year. The risk-free rate is 10%. Which of the following is true, ignoring transaction costs and taxes?

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