QUESTION 3 Mike can purchase a donut stand for $300,000. Mike thinks the donut stand will...

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QUESTION 3 Mike can purchase a donut stand for $300,000. Mike thinks the donut stand will pay after tax cash flow of $50,000 a year for 10 years. Mike thinks the appropriate risk return should be 12%. Mike has asked you to analyze the potential investment. What would you tell Mike about whether he should make the investment? Yes; the appropriate risk return exceeds 12% Yes: the cash flow is worth $500,000 No; the appropriate risk return is less than 12% No; the cash flow is worth about $500,000 QUESTION 3 Mike can purchase a donut stand for $300,000. Mike thinks the donut stand will pay after tax cash flow of $50,000 a year for 10 years. Mike thinks the appropriate risk return should be 12%. Mike has asked you to analyze the potential investment. What would you tell Mike about whether he should make the investment? Yes; the appropriate risk return exceeds 12% Yes: the cash flow is worth $500,000 No; the appropriate risk return is less than 12% No; the cash flow is worth about $500,000

Answer rating: 100% (QA)

The correct answer is No the appropriate risk return is less th... View the full answer