all the shop’s future profits

| June 12, 2016

Question
Last year, a barber shop generated $100,000 in profit. Assume that the shop’s profits grow at 5% per year and that cash flows are discounted at 10% per year. If profits are received at the end of each year, what is the present value of all the shop’s future profits?

$1,500,000
$2,000,000
$2,500,000
$2,100,000
$3,000,000

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