4 Comments
 

You would put in 200/.1 = $2000 dollars

Your WACC is the return threshold you demand. Therefore, you will earn $200 of cash flow on your $2000 investment (or 10% return annually). 

 

Thanks, but just to clarify the exact question is:

“You have the opportunity to purchase a series of cash flows that are £200 in perpetuity. If the WACC is 10%, how much would you pay today?”

Is your answer still valid?

Sorry I should of wrote down the whole question to begin with

 

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