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A new company has an upfront cost of $250,000 today. Starting one year from today they will produce a revenue of $85,000 every year for
A new company has an upfront cost of $250,000 today. Starting one year from today they will produce a revenue of $85,000 every year for a total of ten years. The following year (t=11), the revenue will grow at a rate of 7% and this growth rate will remain constant every year forever. The interest rate is 8%. What is the value of these cash flows today for this new company?
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