(Related to Checkpoint 6.5)(Present value of a growing perpetuity)What is the present value of a perpetual stream of cash flows that pays

$5 comma 500

at the end of year one and the annual cash flows grow at a rate of

2

%

per year indefinitely, if the appropriate discount rate is

9

%?

What if the appropriate discount rate is

7

%?

a.If the appropriate discount rate is

9

%,

the present value of the growing perpetuity is

$nothing

.