Calculate the present value of a growing annuity given the following information: current cash flows: $260,000; cash flow growth rate = 6%; timeframe = 65 years; required rate of return = 14%.

Question

Quizplus · Accepted Answer

The present value of a growing annuity can be calculated using the formula: PV = C * [(1 - ((1 + g) / (1 + r))^n) / (r - g)], where C is the initial cash flow, g is the growth rate, r is the required rate of return, and n is the number of periods. Plugging in the values: PV = 260,000 * [(1 - ((1 + 0.06) / (1 + 0.14))^65) / (0.14 - 0.06)] gives approximately $3,221,296.

Calculate the Present Value of a Growing Annuity Given the Following