kmf229

Answer to Q1: $552,679 I used excel to get the answer instead because I don't have a financial calculator yet. I did it the long way.

Correct me if I am wrong guys.

I put all CFs for yr 1- 25.
CF (1-25) grows at a rate of 4%.

Yr 1 = 40,000(1.04) = 41,600
Yr 2 = 41,600(1.04) = 43,264
.
.
.
Yr 25 = CF(yr 24)*(1.04)

I then discounted all CFs at a rate of 9% to get PV for each year.

Then add all PVs together to get total PV which is $552,679.

I tried to use the formula in cfa book but couldn't get the answer. So I'd like to know how if you know how. So please shed some light. Thanks.