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Consider the following cash flow stream: the first cash flow of $2.50 occurs today. Then, the cash flows will grow negatively by 10% per year
Consider the following cash flow stream: the first cash flow of $2.50 occurs today. Then, the cash flows will grow negatively by 10% per year (i.e. -10% per year) for the next three years before beginning to grow at an annual rate of 3% indefinitely. The discount rate is 7%. What is the present value of this cash flow stream?
a. $48.52 b. $60.73 c. $46.17 d. $70.56
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