What Is the Present Value of a Cash Flow Stream

question 35

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 11^th year.The value of the 11-year annuity is $59,377,as shown below:

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Whig Party

A political party in the United States that was active between the 1830s and the 1850s, opposing the policies of Andrew Jackson and advocating for federal government support of a more diversified economy.

Republican Party

One of the two major contemporary political parties in the United States, traditionally supporting pro-business, conservative, and right-leaning policies.

Democratic Party

A major political party in the United States that historically has advocated for social welfare, civil rights, and governmental intervention in the economy to promote social justice.

Economic Opportunities

Prospects or chances for individuals or businesses to grow financially, commonly measured by income, employment possibilities, and market potential.