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Rachel owns 1 0 0 percent of a gift shop with an equity value of $ 1 5 0 , 0 0 0 . If
Rachel owns percent of a gift shop with an equity value of $ If she keeps the shop open days a week, EBIT is $ If the shop remains open days a week, EBIT increases to $ annually. Rachel needs an additional $ which she can raise today by either selling stock or issuing debt at an interest rate of percent. The principal amount would be repaid in equal annual payments at the end of the next five years. Ignore taxes. What will be the cash flow for the next year to Rachel if she issues stock to another individual, remains open days a week, and distributes all the residual cash flow to the shareholders?
a $
b $
c $
d $
e $
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