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# 5) The owner of Grandma's Applesauce is planning to retire after the coming year. She has to repay a loan \$50,000 plus 8 percent interest and must...

5) The owner of Grandma's Applesauce is planning to retire after the coming year. She has to repay a loan \$50,000 plus 8 percent interest and must rely on cash flow from operations to do so. Cash

flow from operations is uncertain; there is a 70% probability it will equal \$65,000, and a 30% probability it will equal \$45,000. Assuming a tax rate of 0%, what is the owner's expected cash flow

after debt service?

A) \$9,000
B) \$5,000
C) \$11,000
D) \$7,700

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