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Suppose you are considering buying a Starbucks franchise. The initial investment would be $400,000. You expect the franchise will generate an operating cash flow of

Suppose you are considering buying a Starbucks franchise. The initial investment would be $400,000. You expect the franchise will generate an operating cash flow of $60,000 in the first year, which would increase 2% every year thereafter. What is the IRR of this investment? For simplicity, assume the operating cash flows occur at the end of each year.

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