Question
North Carolina Pharmacy is planning to sell its Tanza, Caloocan City, and Mandaluyong City stores. The firm expects to sell each of the three stores
North Carolina Pharmacy is planning to sell its Tanza, Caloocan City, and Mandaluyong City stores. The firm expects to sell each of the three stores for the same, positive cash flow of $F. The firm expects to sell its Tanza store in K years, its Caloocan City store in K years, and its Mandaluyong City store in N years. The cost of capital for the Tanza and Caloocan City stores is L percent and the cost of capital for the Mandaluyong City store is M percent. We know that K < N > 0 and L < 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 Mandaluyong City store is the most valuable of the 3 stores | ||
The Tanza 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 Caloocan City store is the most valuable of the 3 stores | ||
Cannot be determined based on the information given |
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