Question
A pension fund is expected to produce a cash flow of $1,000 at the end of the upcoming year. This cash flow will grow at
A pension fund is expected to produce a cash flow of $1,000 at the end of the upcoming year. This cash flow will grow at a rate of 10% for five years and then at the rate of 7% indefinitely. Assume the annual interest rate for pension-related investments is 12%.
1) What is the value of the pension fund?
NB: Show formulas please.
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Risk Sensitive Investment Management
Authors: Mark H A Davis, Sébastien Lleo
1st Edition
9814578037, 978-9814578035
