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can you explain how two solve this? You forecast a nifty series of income cash flows after you finish your college education, with the following
can you explain how two solve this?
You forecast a nifty series of income cash flows after you finish your college education, with the following 8 years of cash flows (before you retire!): $225,000 annually, with the first cash flow occurring 5 years from now and the final cash flow occurring 12 years from now. Using a 6.00% discount rate to value the cash flows, calculate what this series of salaries is worth in today's-dollar terms. Note: These cash flows just so happen to be a delayed annuity. Set-up 1: If you were to draw a timeline, the first cash flow would appear under the notch for t= Set-up 2: If you were to draw a timeline, the last cash flow would appear under the notch for t= Set-up 3: The solution here is a two-stage solution. Step 1 is to value the 8 -cash-flow annuity at t= one period before the annuity's first cash flow. Step 2 will then be to take the interim result from Step 1 and discount it times. Final answer: This series of salaries have a present value of (or, alternately, in today's-dollar terms are worth) \$ ..... [Round your answer to the nearest dollar.]Step by Step Solution
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