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Suppose there is a cash-generating machine that produces a cash flow every year that grows at a rate of 2% each year. You are considering

Suppose there is a cash-generating machine that produces a cash flow every year that grows at a rate of 2% each year. You are considering purchasing this machine today. The machine has just generated a cash flow of $10, which you just missed, and will generate another one in one year from now. The discount rate applicable to this machine is 12% per year. If you wanted to buy this machine now, how much would you be willing to pay for?

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