Graph the value effect as a function of the number of years

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Reference no: EM131235119

Assume that the correct future cash flow is $100 and the correct discount rate is 10%. Consider the value effect of a 5% error in cash flows and the effect of a 5% error in discount rates.

(a) Graph the value effect (both in absolute values and in percent of the correct upfront present value) as a function of the number of years from 1 year to 20 years.

(b) Is this an accurate real-world representation of how your uncertainty about your own calculations should look?

Reference no: EM131235119

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