What is the present value of the net cash flows from the


Phillips Industries runs a small manufacturing operation. For this fiscal year, it expects real net cash flows of $194,000. The company is an ongoing operation, but it expects competitive pressures to erode its real net cash flows at 3 percent per year in perpetuity. The appropriate real discount rate for the company is 12 percent. All net cash flows are received at year-end.

What is the present value of the net cash flows from the company’s operations?

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Financial Management: What is the present value of the net cash flows from the
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