From 2036 onward, the project generates annual revenues paid at year-end, starting with a = 140,000 € in 2036 and growing at a constant rate g = 2% per year forever. The required return is r = 5%.

Which of the following expressions is correct for the present value at 1 January 2026 of these revenues?

Question

From 2036 onward, the project generates annual revenues paid at year-end, starting with a = 140,000 € in 2036 and growing at a constant rate g = 2% per year forever. The required return is r = 5%. 
   
 Which of the following expressions is correct for the present value at 1 January 2026 of these revenues?

Answer

PV36_plus = a/r * 1/(1+r)^10

Answer

PV36_plus = a/(r-g)

Answer

PV36_plus = a*(1+g)/(r-g) * 1/(1+r)^10

Answer

PV36_plus = a/(r-g) * 1/(1+r)^10

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From 2036 onward, the project generates annual revenues paid at year-end, s...

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