Present value of perpetual stream of annual cash flows

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Reference no: EM132005911

Please show work by hand (with equations) and with using excel formula.

1. Calculate the present value (PV ) of an annuity stream of 5 annual cash flows of $1,200, with the first cash flow received in one year, assuming a discount rate of 10%.

2. What is the present value of a perpetual stream of annual cash flows of $100, with the first cash flow to be received in one year, assuming a discount rate of 8%?

Reference no: EM132005911

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