Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 4 20 pts Contrail Air Inc. runs a small drone manufacturing business. For this year, the company expects real net cash flow of $175,000.

image text in transcribed

Question 4 20 pts Contrail Air Inc. runs a small drone manufacturing business. For this year, the company expects real net cash flow of $175,000. The company expects its cash flow to erode at a rate of 2% percent per year in perpetuity. The appropriate real discount rate for the company is 9% percent. Assume all cash flows received at the end of the year. What is the present value of the cash flows? Cash flow5175000 Cash flow growth rate 1-2% Required return 9% $(129,629,629.63) $2,333,333.33 $1,666,666.67 $(29,166.67)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions

Question

Median weekly earnings of men and women by occupation

Answered: 1 week ago