Determine maximum you would be willing to pay for investment, Finance Basics

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Determine maximum you would be willing to pay for investment

Problem

An investment promises to pay you $100 per year starting immediately. The cash flow from the investment is expected to increase by 5 PERCENT per year forever. If alternative investments of similar risk earn a return of 11 percent per year, determine the maximum you would be willing to pay for the investment.

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Finance Basics: Determine maximum you would be willing to pay for investment

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Finance Basics: Determine maximum you would be willing to pay for investment

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