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Problem 8 . A growing annuity is a stream of cash flows that pays at regular intervals and growing at a constant rate g >
Problem A growing annuity is a stream of cash flows that pays at regular intervals and
growing at a constant rate up to some final date. In particular, it pays
at the end of year until, where is a constant. Cash flows are paid until the end of
the year.
a Show that the present value of a growing annuity is
where is a discount rate.
b Does the above formula hold if Problem A growing annuity is a stream of cash flows that pays at regular intervals and
growing at a constant rate up to some final date. In particular, it pays
at the end of year until, where is a constant. Cash flows are paid until the end of
the year.
a Show that the present value of a growing annuity is
where is a discount rate.
b Does the above formula hold if
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