Question
You own building O and building R. The next cash flow for each building is expected in 1 year. Building O has a cost of
You own building O and building R. The next cash flow for each building is expected in 1 year. Building O has a cost of capital of 9.20 percent and is expected to produce annual cash flows of $507,666.00 forever. Building R is worth $5,662,369.00 and is expected to produce annual cash flows of $581,811.00 forever. Which assertion is true? Building O is more valuable than building R and building R is more risky than building O Building R is more valuable than building O and building O is more risky than building R Building O is more valuable than building R and building O is more risky than building R Building R is more valuable than building O and building R is more risky than building O Building O and building R either have the same value, the same level of risk, or both the same value and level of risk.
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