Solved

What Is the Present Value of a Cash Flow Stream

Question 41

Essay

What is the present value of a cash flow stream of $10,000 per year annually for 11 years that then grows at 2 percent per year forever? Assume the appropriate discount rate is 12 percent.Divide the cash flows into two periods: An 11-year annuity of $10,000,and a growing perpetuity beginning in the 11th year.The value of the 11-year annuity is $59,377,as shown below:

Correct Answer:

verifed

Verified

blured image The value of the growing perpetuity (us...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents