G, a biotechnology firm, has recently reinvested all of its earnings into R&D. The market expect G to generate net zero annual cashflows for the next 5 years. Then in the 6th year, the company is expected to generate a net cashflow of $100 million. From then on, the company is expected to generate the same cashflow for every year, until infinity(!). If the required rate of return of the market is assumed constant at 13%, what would be the current value of G (choose the most accurate answer, assuming all cashflows occur by the end of the year)? Hint: you might want to refer back to the present value of different types of cashflows that we already discussed. Identify the type of cashflows in this case. Also pay attention to the timing of the cashflows. *

$500 million

$700 million

$900 million

$1100 million

Over $1100 million