Question

Corporate finance mark weinstein has been working on an advanced technology in laser eye surgery. his technology will be available in the near term. he anticipates his first annual cash flow from the technology to be $180,000 received two years from today. subsequent annual cash flows will grow at 4 percent in perpetuity. what is the present value of the technology if the discount rate is 11 percent?

Answer 1

To compute for the present value of the technology, we use the formula :

Present value of the technology = ( $ 180,000 / (11% - 4%)) / 1.11 = $ 2,316,602.3166

Therefore, the answer is $2,316,602.3166