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You and 99 other partners are given the opportunity to purchase a gas station. Each partner would contribute $10,000. The station's revenues have been consistent at$420,000 per year for several years and are expected to remain consistent in the future. The operating costs of the station (including maintenance and repair, depreciation, and salaries) have remained consistent at $ 360,000 per year. 5-year Treasury bills are currently yielding$7.5 percent interest. Would you participate in the transaction? Explain your response.
Solution
VerifiedAnswered 2 years ago
Answered 2 years ago
Step 1
1 of 5We must first assess whether the gas station's performance for a year will be less than, equal to, or greater than the 7.5% performance of a 5-year Treasury Bill.
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