This cash flow is expected to grow at constant rate

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1. Freddy has found an investment that pays $1.82 next year. This cash flow is expected to grow at a constant rate of 4.5%, forever, and he requires a 10% rate of return on the investment. Calculate the present value. (Round to 3 decimals)

2. Toyota owes a tire company $1,000,000 and plans to pay $220,000 per year for 5 years with the first payment occurring one year from today. Calculate the implied interest rate on this set of cash flows. (Enter percentages as decimals and round to 4 decimals ... e.g. 5% = 0.05)

Reference no: EM131992657

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