Bryant Investments is putting out a new product. The product will pay out $32,000 in the first year, and after that the payouts will grow by an annual rate of 2.75 percent forever. If you can invest the cash flows at 7.25 percent, how much will you be willing to pay for this perpetuity

PV= $711,111.11

Explanation:

Giving the following information:

Cash flow (Cf)= $32,000

Annual growth (g)= 2.75%

Interest rate (i)= 7.25%

To calculate the present value (the amount that you are willing to pay), we need to use the following formula:

PV= Cf / (i - g)

PV= 32,000 / (0.0725 - 0.0275)

PV= $711,111.11

answer; the correct answer is (0.08);

it's actually a very difficult task, due to not many people can make 2 million dollars in 2 years. besides that, to the not-so-realistic ideas, you can create a business. it could be practically anything, but make it into a business that isn't that known yet, you get me? also, lets not forget about stock market. that's where all the good stuff happens. use investments at the beginning and begin to raise up your business or whatever you're going to do. as this is a very non-realistic idea, it's still worth the shot!