One investment is expected to yield a payoff of 5 in the


One investment is expected to yield a payoff of $5 in the next year, and then the payoff will grow at a constant rate of 4% per year for nine more years. If you require a return of 8%, what is the highest price you are willing to pay for this investment?

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Financial Management: One investment is expected to yield a payoff of 5 in the
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