Homework Answers
Cash floe = $6,500
Growth rate = 4%
Discount rate = 11%
Present value o Perpetuity = Cash flow * (1 + g) / (Ke - g)
Present value o Perpetuity = $6,500 * (1 + 0.04) / (0.11 - 0.04)
Present value o Perpetuity = $96,571.43
If discount rate is 9%
Then Present value o Perpetuity = 6,500 * 1.04 / (0.09 - 0.04)
Present value o Perpetuity = $135,200
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