An investment advisor offers you a product that will deliver cash-flows at the end of each of the next seven years. The first cashflow is $5,000 and every year thereafter, the cashflow will grow at a rate of 4%. If the annual interest rate is 2%, what is the present value of this opportunity?
An investment advisor offers you a product that will deliver cash-flows at the end of each of the next seven years. The first cashflow is $5,000 and every year thereafter, the cashflow will grow at a rate of 4%. If the annual interest rate is 2%, what is the present value of this opportunity?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 29P
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Question
An investment advisor offers you a product that
will deliver cash-flows at the end of each of the
next seven years. The first cashflow is $5,000
and every year thereafter, the cashflow will grow
at a rate of 4%. If the annual interest rate is
2%, what is the present value of this
opportunity?
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