Question: General Atomics has signed a development contract with the following revenues to be paid to them for the first 5 years of the project: End
General Atomics has signed a development contract with the following revenues to be paid to them for the first years of the project:
End of Year: Cash Flow: Millions
After year the contract calls for a annual increase in revenues to be paid to General Atomics over each of the next years. In other words, the Year payment will be $ $ Year $ $ and so forth through the end of Year What is the PV of this contract for General Atomics?Hint: Be careful about when the arithmetic gradient ends and the geometric gradient begins General Atomics uses a discount rate.
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