Question
Georgia Furniture Stores is planning to sell its Valdosta, Sandy Springs, and Milton stores. The firm expects to sell each of the three stores for
Georgia Furniture Stores is planning to sell its Valdosta, Sandy Springs, and Milton stores. The firm expects to sell each of the three stores for the same, positive cash flow of $A. The firm expects to sell its Valdosta store in Y years, its Sandy Springs store in Y years, and its Milton store in Z years. The cost of capital for the Valdosta and Sandy Springs stores is J percent and the cost of capital for the Milton store is M percent. We know that Y < Z > 0 and J < M > 0. The cash flows from the sales are the only cash flows associated with the various stores. Based on the information in the preceding paragraph, which one of the following assertions is true?
The Valdosta store is the most valuable of the 3 stores | ||
Two of the three stores have equal value and those two stores are more valuable than the third store or all three stores have the same value | ||
The Milton store is the most valuable of the 3 stores | ||
The Sandy Springs store is the most valuable of the 3 stores | ||
Cannot be determined based on the information given |
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