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Answer the question.A major electronics manufacturer expects to generate additional revenue
from its recently won government contract. The company forecasts that the revenue will be $190
million in the first year, but will decline by $2 million every year for the next 3 years. What is
the present value of total revenue at an interest rate of 18% per year?
Solution
Hi,
Please find the detailed answer as follows:
Present Value = 190/(1+.18)^1 + (190 -2)/(1+.18)^2 + (190 - 2 - 2)/(1+.18)^3 + + (190 - 2 - 2 -
2)/(1+.18)^4 = 504.15 million
Answer is 504.15 million.
Thanks.
Answer the question-A major electronics manufacturer expects to genera.docx

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Answer the question-A major electronics manufacturer expects to genera.docx

  • 1. Answer the question.A major electronics manufacturer expects to generate additional revenue from its recently won government contract. The company forecasts that the revenue will be $190 million in the first year, but will decline by $2 million every year for the next 3 years. What is the present value of total revenue at an interest rate of 18% per year? Solution Hi, Please find the detailed answer as follows: Present Value = 190/(1+.18)^1 + (190 -2)/(1+.18)^2 + (190 - 2 - 2)/(1+.18)^3 + + (190 - 2 - 2 - 2)/(1+.18)^4 = 504.15 million Answer is 504.15 million. Thanks.