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

12

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

$25,000

and

$23,000

in one and two years respectively, and then

17,000

per year after that for

10

years. If Wally requires a return of

8.4 %

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