Reference no: EM132986423

Question - Assume an investment will generate cash flows at the end of Years 1 through 5 equal to $2,000, - 3,000, $3,000, $3,900, and $5,000, respectively; from that point, the investment begins to generate a series of constant-growth perpetual fash flows.

1. Calculate the present value of these cash flows at the end of year 0, assuming a discount rate of 10% and a 3% constant growth rate for the perpetuity.

a. 51,238

b. 55,785

c. 53,043

d. 52,107

e. 45,682

2. Calculate the present value weighted growth rate for this investment.

a. 7.05%

b. 6.23%

c. 5.87%

d. 6.01%

e. 6.95%