Determine the present value of the venture

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Problem - Venture Present Values - A venture investor wants to estimate the value of a venture. The venture is not expected to produce any free cash flows until the end of Year 6, when the cash flow is estimated at $2,000,000, and is expected to grow at a 7 percent annual rate per year into the future.

A. Estimate the terminal value of the venture at the end of Year 5 if the discount rate at that time is 20 percent.

B. Determine the present value of the venture at the end of Year 0 if the venture investor wants a 40 percent annual rate of return on the investment.

Reference no: EM132906627

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