Wally, president of Wally's Burgers, is considering franchising. He has a potential franchise agreement that would allow him to receive

13

end-of-year payments starting one year from now. The first two payments would be

$27,000

and

$24,000

in one and two years respectively, and then

18,000

per year after that for

11

years. If Wally requires a return of

9.3 %

what is the present value of this stream of cash flows?