Assume that the correct future cash flow is 100 and the, Ask an Expert

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Assume that the correct future cash flow is $100 and the correct discount rate is 10%. Consider the value effect of a 5% error in cash flows and the effect of a 5% error in discount rates.

(a) Graph the value effect (both in absolute values and in percent of the correct upfront present value) as a function of the number of years from 1 year to 20 years.

(b) Is this an accurate real-world representation of how your uncertainty about your own calculations should look?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91991002

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