Calculate the Present Value of a Growing Annuity Given the Following

question 118

Multiple Choice

Calculate the present value of a growing annuity given the following information: annual cash flows = $120,000; cash flow growth rate = 2%; required rate of return = 9%; timeframe = 20 years.

• A) $1,059,762
• B) $1,259,762
• C) $1,459,762
• D) $1,659,762
• E) $1,859,762

---

Definitions:

Marginal Cost

The extra expense involved in creating an additional unit of a product or service.

Variable Costs

Costs that vary directly with the level of production or the volume of output.

Lease

A contract by which one party conveys land, property, services, or goods to another for a specified period, usually in exchange for periodic payments.

Bouquets

A collection or arrangement of flowers.