Your consulting firm will produce cash flows of $190,000 this year, and you expect cash flows thereafter to keep pace with anyincrease in the general level of prices. The interest rate currently is 5.2%, and you anticipate inflation of about 1.2%.a. What is the present value of your firm's cash flows for years 1 through 5?Note: Do not round intermediate calculations. Round your answer to 2 decimal places.Present valueb. How would your answer to (a) change if you anticipated no growth in cash flow?Note: Do not round intermediate calculations. Round your answer to 2 decimal places.Present value

a. The present value of growing annuityCF1 = 190,000 * 1.012 = 192,280PV = $846,974.47 b. With no…

Answered: Your consulting firm will produce cash…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 12MC: (1) What is the value at the end of Year 3 of the following cash flow stream if the quoted interest...

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