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 ash flow from the technology to

be $$175,000,$ received two years from today. Subsequent annual cash flows will grow at $3\mathrm{.}8\%$ in

perpetuity. What is the present value of the technology if the if the discount rate is $9\mathrm{.}7\%?$

$5.$ Perpetuities

Young Pharmaceuticals is considering a drug project that costs $$2\mathrm{.}75$ million today and is excepted

to generate end$-$of$-$year annual cash flows of $$273,000$ forever. At what discount rate would Young

be indifferent between accepting or rejecting the project?

$6.$ Growing Annuity

Your job pays you only once a year for all the work you did over the previous $12$ months. Today,

December $31,$ you received your salary of $$74,500,$ and you plan to spend all of it$.$

Year Cash Flow

$1$ $$795$

$2$ $$945$

$3$ $$1,325$

$4$ $$1,860$