Value of the infinite series of cash flows

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Reference no: EM132726079

Your friend Harrison opens a new automobile repair shop today (January 1, 2020). He expects his shop to generate stable cash flows of $50,000 at the end of each year forever. Assuming that the discount rate on the series of cash flows with an equivalent amount of risk is 20% p.a. compounded annually, what is the value of the infinite series of cash flows generated by Harrison's shop in today's dollars? (Round your final answer to the nearest dollar).

Reference no: EM132726079

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