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Question #2 [6] Z owns a policy that will pay out a growth perpetuity of annual cash flows. Cash flows grow at 2.2% per year.

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Question #2 [6] Z owns a policy that will pay out a growth perpetuity of annual cash flows. Cash flows grow at 2.2% per year. Z has just received a cash flow of $2,700 as a result of owning this policy (next cash flow in one year). The inflation rate is, and is expected to remain at an effective 1.6% p.a. What is the value of this policy if it is valued at a real rate of 3.396

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