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What is the present value of the cash flows

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Contrail Air Inc. runs a small drone manufacturing business. For this year, the company expects real net cash flow of $180,000. The company expects its cash flow to erode at a rate of 3% percent per year in perpetuity. The appropriate real discount rate for the company is 8% percent. Assume all cash flows received at the end of the year.

What is the present value of the cash flows?

Cash flow $180,000

Cash flow growth rate -3%

Required return 8%

Reference no: EM131950673

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