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Question 5 10 points Your best friend is opening a vintage clothing store and wants you to invest. For only $35,000 today, she will offer you a perpetual stream of cash flows representing a dividend from the potential profits. Those cash flows to you will vary for the first three years; and thereafter will grow at 1.5% annually and in perpetuity. (Just for clarification, this means that, based on the estimated Year 3 cash dividend of $12,000, the Year 4 cash flow to you will be $12,180 and the Year 5 cash flow will be $12,363.) This small chart represents the first three years of the proposal: 0 Year Cash Flow (35,000 1 2,000 2 10,000 3 12,000 You are intrigued, but worried: failure in the retail industry is rampant. You decide that you will assign it a risk-adjusted discount rate of 30%. What is the Net Present Value of all of your expected cash flows, including the (negative) up-front investment outflow and the perpetuity at the end of your forecast? O A. OOOO ($14,888) ($ 2,917) ($ 2,805) ($ 2,630) $ 13,543

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