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An all equity capitalized firm (i.e. no debt in capital structure) is expected to produce a cash flow in the amount of $250,000 in its
An all equity capitalized firm (i.e. no debt in capital structure) is expected to produce a cash flow in the amount of $250,000 in its first year of operation. Cash flow is expected to grow at 2% annually for the foreseeable future each year thereafter. If the firm's investors require a 20% return, what is the estimated Market Value of the Firm?
A. $1,388,888 |
B. $1,250,000
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C. $250,000
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D. None of the above.
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