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Liberty Group Is Considering Making an Investment in a New

Question 48

Multiple Choice

Liberty Group is considering making an investment in a new firm that it expects to be worth $45 million in three years, at which point Liberty plans to exit the venture. Liberty is willing to make an initial investment of $10 million, but has a required return of 55% for this risky venture. What ownership fraction will Liberty require in order to make the investment?


A) 45%
B) 55%
C) 70%
D) 83%
E) 91%

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