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Alex787 [66]
3 years ago
8

Gomi Waste Disposal is planning to sell its Columbus, Memphis, and Detroit facilities. The firm expects to sell each of the thre

e facilities for the same, positive cash flow of W dollars. The firm expects to sell its Memphis facility in Z years, its Detroit facility in Z years, and its Columbus facility in T years. The cost of capital for the Memphis facility is Q percent, the cost of capital for the Columbus facility is Q percent, and the cost of capital for the Detroit facility is P percent. We know that T > Z > 0 and Q > P > 0. The cash flows from the sales are the only cash flows associated with the various facilities. Based on the information in the preceding paragraph, which one of the following assertions is true?
A. The Detroit facility is the most valuable of the 3 facilities
B. None of the other assertions is true
C. Two of the three facilities have equal value and those two facilities are more valuable than the third facility or all three facilities have the same value
D. The Columbus facility is the most valuable of the 3 facilities
E. The Memphis facility is the most valuable of the 3 facilities
Business
1 answer:
Mnenie [13.5K]3 years ago
3 0
The answer for this question is C
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