Answer the following questions assuming an interest rate of 8%. a) (2) Suppose you will receive a series of cash flows that last forever. The first cash flow is $500 and is received next year. The cash flows grow at a rate of 1%. b) (2) What is the present value of the cash flows from a) if they instead start in 6 years time? c) (2) What is the present value of the cash flows from a) if the cash flows only last until year 10?
Answer the following questions assuming an interest rate of 8%. a) (2) Suppose you will receive a series of cash flows that last forever. The first cash flow is $500 and is received next year. The cash flows grow at a rate of 1%. b) (2) What is the present value of the cash flows from a) if they instead start in 6 years time? c) (2) What is the present value of the cash flows from a) if the cash flows only last until year 10?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....
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Answer the following questions assuming an interest rate of 8%.
a) (2) Suppose you will receive a series of cash flows that last forever. The first cash flow is $500 and is received next year. The cash flows grow at a rate of 1%.
b) (2) What is the present value of the cash flows from a) if they instead start in 6 years time?
c) (2) What is the present value of the cash flows from a) if the cash flows only last until year 10?
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