What is the present value to the nearest dollar of a cash flow stream of $10,000 per year annually for 11 years that then grows at 3 percent per year forever? Assume the appropriate discount rate is 13 percent
Added by Sarah J.
Step 1
In this case, C = $10,000, r = 13%, and n = 11. Plugging these values into the formula, we get: PV = $10,000 x [(1 - (1 + 0.13)^-11) / 0.13] = $70,947 So the present value of the cash flow stream for the first 11 years is $70,947. Show more…
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