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Your are evaluating an investment opportunity that is expected to generate $185 of cash flow next year. For every year after that, the cash flow
Your are evaluating an investment opportunity that is expected to generate $185 of cash flow next year. For every year after that, the cash flow you expect to receive will increase by 2.9% (each year) and will do so until the end of investment horizon, which is 20 years. Your opportunity cost of capital is 5.9%. a. What is the value of this investment opportunity? b. You decided to replicate this investment opportunity by depositing the amount you calculated in part (a) in an account, and earning your opportunity cost (withdrawing each payment right before the end of each year). How much will you have in that account at the end of year 10? a. What is the value of this investment opportunity? The value is $. (Round to the nearest cent.) b. You decided to replicate this investment opportunity by depositing the amount you calculated in part (a) in an account, and earning your opportunity cost (withdrawing each payment right before the end of each year). How much will you have in that account at the end of year 10? Balance at the end of year 10 $. (Round to the nearest cent.)
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