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Missouri Electronics Stores is planning to sell its Rolla, Poplar Bluff, and Wentzville stores. The firm expects to sell each of the three stores for
Missouri Electronics Stores is planning to sell its Rolla, Poplar Bluff, and Wentzville stores. The firm expects to sell each of the three stores for the same, positive cash flow of $D. The firm expects to sell its Rolla store in N years, its Poplar Bluff store in N years, and its Wentzville store in Z years. The cost of capital for the Rolla and Poplar Bluff stores is L percent and the cost of capital for the Wentzville store is R percent. We know that N>Z> 0 and L>R>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 Wentzville 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 Poplar Bluff store is the most valuable of the 3 stores The Rolla store is the most valuable of the 3 stores Cannot be determined based on the information given
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