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Common stock value long dash All growth modelsPersonal Finance ProblemYou are evaluating the potential purchase of a small business currently generating $ 45 comma 000
Common stock value long dash All growth modelsPersonal Finance ProblemYou are evaluating the potential purchase of a small business currently generating $ 45 comma 000 45,000 of after-tax cash flow ( Upper D 0 D0 equals =$ 45 comma 000 45,000). On the basis of a review of similar-risk investment opportunities, you must earn a rate of return of 16 16% on the proposed purchase. Because you are relatively uncertain about future cash flows, you decide to estimate the firm's value using two possible assumptions about the growth rate of cash flows.
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