Expected to produce cash flow in the amount

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Reference no: EM131058338

1. An all equity firm (i.e. no debt) it expected to produce cash flow in the amount of $110,000 in its first year of operation. Cash flow is expected to grow at 1% for the forseeable future. If the firm's investors require 15% return, what is the Market Value of the Firm?

2. Refer back to question 4. If another firm offers to buy the firm detailed in #4 for $650,000, and all other information stays the same, what is the required rate of return of the firm making the offer (to the nearest whole percent)?

A. 15%

B. 17%

C. 18%

D. Cannot calculate with given info

Reference no: EM131058338

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