Question
I am having issues with the following scenario, Shawn Paschal has been working on an advanced technology for use in the green fuel production at
I am having issues with the following scenario, "Shawn Paschal has been working on an advanced technology for use in the green fuel production at King Fisher Aviation. He is almost finished with the technology and anticipates the first cash flow from the technology to be $200,000 received 2 years from today. Subsequent annual cash flows will grow at 4.5 percent in perpetuity. What is the present value of the technology if the discount rate is 12 percent?" I understand how to solve for present value but, the 4.5% perpetuity is throwing me for a loop.
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