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Question 5 (1 point) Today is t = 0. The risk free rate is 5%. Consider the following sets of cash flows: Set 1: Growing
Question 5 (1 point) Today is t = 0. The risk free rate is 5%. Consider the following sets of cash flows: Set 1: Growing perpetuity with first cash flow equal to $105 at t = 2 and g = 3%. Set 2: Growing perpetuity with first cash flow equal to $105(1.04) at t = 3 and g = 3%. Set 3: Growing perpetuity with first cash flow equal to $105(1.042) at t = 4 and g = 3%. ...(The pattern continues to Set infinity)... What is the total PV of all cash flows from all of the infinite sets (rounded to the nearest dollar)? 4,762 5,000 5,250 47,619 50,000 52,500 476,190 500,000 525,000 None of the above
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