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umka21 [38]
3 years ago
8

the annual discount rate is 10% beginning in 2016, you will receive $10000 on the first day of every year. what is the resent va

lue of this inginite sequence of cash flow
Business
1 answer:
-Dominant- [34]3 years ago
7 0

Answer:

$100,000

Explanation:

Data provided

Perpetual cash flow = $10,000

Discount rate = 10%

According to the given situation, the computation of Present value of this inginite sequence of cash flow is shown below:-

Present value = Perpetual cash flow ÷ discount rate

= $10,000 ÷ 10%

= $10,000 ÷ 0.1

= $100,000

Therefore for computing the present value we simply applied the above formula.

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