You wrote a piece of software that does a better job of allowing computers to ne

Question

You wrote a piece of software that does a better job of allowing computers to network than any other program designed for this purpose. A large networking company wants to incorporate your software into their systems and is offering to pay you $476,000  today, plus $476,000 at the end of each of the following six years for permission to do this. If the appropriate interest rate is 7  percent, what is the present value of the cash flow stream that the company is offering you? (Round answer to the nearest whole dollar, e.g. 5,275.)

Present value $ You wrote a piece of software that does a better job of allowing computers to network than any other program designed for this purpose. A large networking company wants to incorporate your software into their systems and is offering to pay you $476,000 today, plus $476,000 at the end of each of the following six years for permission to do this. If the appropriate interest rate is 7 percent, what is the present value of the cash flow stream that the company is offering you? (Round answer to the nearest whole dollar, e.g. 5,275.)

Explanation / Answer

PV = 476000/1.07 + 476000/1.07^2 + 476000/1.07^3 + 476000/1.07^4 + 476000/1.07^5 + 476000/1.07^6 + 476000/1.07^7

= 2565302

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