What is the value of this investment today

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Reference no: EM132070906

Your friend is talking to you about one of their investments. Yesterday, your friend received a cheque from the investment for $6,000. According to the company’s annual report and forecast, the company expects the amount of the cash flow to increase or grow at 15 percent for the next 5 years and then to grow at 2 percent forever.

1. If you require a 15% return on your investment, what is the value of this investment today?

2. If interest rates are 15% per year and the first cash flow of $6,000 occurs three months from now, what is this investment worth today?

3. If the first cash flow of $6,000 occurs today, what is the value of the investment today?

Reference no: EM132070906

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