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Q . 3 - A firm's expected annual cash flows for the next two years are $ 2 , 5 0 0 and $ 3

Q.3- A firm's expected annual cash flows for the next two years are $2,500 and $3,500 in nominal terms (nominal cash flows). The year-three cash flow is expected to be $5,000 in real terms (real cash flow) which is expected to continue in perpetuity. The expected long-term inflation rate is 1%. The appropriate real WACC has been calculated as 6% pa. What is the present value of the cash flows?
A. $79,555
B. $75,307
C. $61,455
D. $49,340
E. $89,129
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