The board of directors of a corporation is calculating the price to pay for a business that

Question:

The board of directors of a corporation is calculating the price to pay for a business that is forecast to yield a continuous flow of profit of $500,000 per year. The money will earn a nominal rate of 5% per year compounded continuously. What is the present value of the business
(a) For 20 years?
(b) Forever (in perpetuity)?

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