Calculate the Present Value of a Growing Annuity Given the Following

question 332

Multiple Choice

Calculate the present value of a growing annuity given the following information: current cash flows: $90,000; cash flow growth rate = 2%; timeframe = 20 years; required rate of return = 5%.

• A) $1,319,886
• B) $1,329,886
• C) $1,339,886
• D) $1,349,886
• E) $1,359,886

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Definitions:

Inelastic Demand

A characteristic of demand where the quantity demanded changes minimally in response to price changes.

Total Farm Income

The cumulative financial earnings from all farm production and related activities over a specific period.

Inelastic Demand

A situation where the demand for a product does not change significantly when the price of that product changes.

Agricultural Products

Commodities produced through farming and agriculture, such as crops and livestock, intended primarily for consumption and use.