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Divestiture Decision Kylee Co. (a U.S. firm) has a British subsidiary that will generate cash flows of 3 million pounds at the end of each
Divestiture Decision Kylee Co. (a U.S. firm) has a British subsidiary that will generate cash flows of 3 million pounds at the end of each of the next two years. It uses the prevailing spot rate of the British pound of $1.80 as a forecast of the future value of the pound. Its required rate of return on this business is 16 percent. Kylee just received an offer from a British company who wants to buy the subsidiary for $8,000,000. Assume that Kylee would not be subject to any tax on the sale. a. Should Kylee Co sell the business? Show your work
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