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Which of the following is TRUE? The present value of an annuity at t=0 requires us to know the cash flow at t=0. Growing perpetuities
Which of the following is TRUE? The present value of an annuity at t=0 requires us to know the cash flow at t=0. Growing perpetuities must have a growth rate less than its discount rate. The discount rate must be greater than the growth rate when computing the present value of a growing annuity. The annuity formula simplifies to the perpetuity formula because at very large N, the present value converges to 1.
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