Determine the present value for the venture

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Reference no: EM1360424

The LowTec Corporation is about to begin producing and selling its prototype product. Annual cash flows for the next five years are forcasted as:
1 ($50,000)
2 ($20,000)
3 $100,000
4 $400,000
5 $800,000

Investors in LowTec have an expected rate of return of 30 percent on their investment until year 5, when the rate of return is expected to drop to 18%. The perpetuity growth rate for cash flows after Year 6 is expected to be 7 percent.

Determine the present value for the LowTec venture.

Reference no: EM1360424

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