Richmond Funds Has Decide to Investment in a New Firm

question 36

Multiple Choice

Richmond Funds has decide to investment in a new firm that it expects to be worth $50 million in four years when Richmond plans leave the venture. Richmond has established a 45% required return for this project and is planning to make an initial investment of $8 million. What ownership fraction will Richmond Funds require in order to make the investment?

• A)45%
• B)65%
• C)71%
• D)83%
• E)91%

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