Need business and finance help to present value of a perpetuity

Business & Finance
Tutor: None Selected Time limit: 1 Day

What is the present value of a perpetual stream of cash flows that pays $80,000 at the end of year one and then grows at a rate of 5% per year indefinitely? The rate of interest used to discount the cash flows is 13%.

Round to the nearest cent
Nov 22nd, 2015

Thank you for the opportunity to help you with your question!

pv = summation of (80000*(1.05/1.13)^r) where r varies from 1 to infinity

pv = 1.05*10^6 = $1050000.00

Please let me know if you need any clarification. I'm always happy to answer your questions.
Nov 22nd, 2015

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