Problem 1: Single- and Multiple-Choice Questions (22 points)…
Problem 1: Single- and Multiple-Choice Questions (22 points) d) Single-choice question: Assume you receive an annual risk-free cash flow of $150 that starts in two years (t=2) and that continues up to infinity, i.e., the cash flow is a constant perpetuity. Today you are the time t=0. You will receive the first cash flow in t=2. The risk-free rate is 4% for all maturities. What is today’s (t=0) present value of the stream of future cash flows? (3 points)