You are making forecasts for two securities that promise perpetual, growing annual cash flows. For both securities, calculate the cash flow you can expect at the end of year 7 (that is, seven years from now). 

a. Security A will pay $10 next year (year 1), and the cash flows will grow at a rate of 2% per year thereafter. 

b. Security B paid $9 last night, and the cash flows are expected to grow at a rate of 2.5% per year.

Answer rating: 100% (QA)

To calculate the cash flow you can expect at the end of year 7 for both Security A and Security B yo... View the full answer