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Kerry can lease a cosmetic stand in the mall for $250,000. Kerry thinks the cosmetic stand will pay after tax cash flow of $41,500 a
Kerry can lease a cosmetic stand in the mall for $250,000. Kerry thinks the cosmetic stand will pay after tax cash flow of $41,500 a year for 10 years. At the end of 10 years, Kerry would give up the lease and receive no terminal cash flow. Kerry thinks the appropriate risk return should be 10%. Kerry has asked you to analyze the potential investment. What would you tell Kerry about whether she should make the investment?
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