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An investment, which has an expected return of 5.9%, is expected to make annual cash flows forever. The first annual cash flow is expected in
An investment, which has an expected return of 5.9%, is expected to make annual cash flows forever. The first annual cash flow is expected in 1 year and all subsequent annual cash flows are expected to grow at a constant rate of 2.5% per year. We know that the cash flow expected in 1 year from today is expected to be $5,400. What is the present value (as of today) of the cash flow that is expected to be made in 3 years from today? a. $4,776.98 (plus or minus $10.00) b. $5,058.82 (plus or minus $10.00) C. $5,268.29 (plus or minus $10.00) d. $4,896.41 (plus or minus $10.00) e. None of the above is within $10.00 of the correct answer
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