Question: Leno Industries runs a small manufacturing operation For this fiscal
Leno Industries runs a small manufacturing operation. For this fiscal year, it expects real net cash flows of $210,000. 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 Leno is 6.5 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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