An investment is expected to generate cash flows of $20,000 next year (at time t=1), and $10,000 in two years at time t=2. After that, the annual cash flows generated by the investment will decrease forever at growth rate of -8% APR compounded annually. What is the present value of this stream of cash flows if r = 10% APR compounded annually? Use a financial calculator or excel.
An investment is expected to generate cash flows of $20,000 next year (at time t=1), and $10,000 in two years at time t=2. After that, the annual cash flows generated by the investment will decrease forever at growth rate of -8% APR compounded annually. What is the present value of this stream of cash flows if r = 10% APR compounded annually? Use a financial calculator or excel.
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 2P
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An investment is expected to generate cash flows of $20,000 next year (at time t=1), and $10,000 in two years at time t=2. After that, the annual cash flows generated by the investment will decrease forever at growth rate of -8% APR compounded annually. What is the present value of this stream of cash flows if r = 10% APR compounded annually? Use a financial calculator or excel.
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