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Usually we compute present values using a constant interest rate. But we know that interest rates vary over time, and it is impossible to know
Usually we compute present values using a constant interest rate. But we know that interest rates vary over time, and it is impossible to know what the interest rate will be in 10 or 20 years. Why is using the current interest rate a good approach? Or would we be betteroff to simply ignore cash flows arriving beyond the period for which we have reasonable interest rate estimates? Explain your answer.
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