What is the present value of the patent

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Reference no: EM132197634

Question: A company is expecting sustained growth for the next 15 years due to a patent it has successfully defended. Next year the company is expected to bring in net cash flows of $350,000. The company expects its earnings to grow annually at a rate of 15% for the next 5 years and then by 7.5% for the remainder of the 15 year horizon. What is the present value of the patent - this growing annuity - if the company uses a discount rate of 12 percent on its investments? (Round to the nearest dollar.)

Reference no: EM132197634

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