Answer:
PV= $69,003,731.47
Explanation:
Giving the following information:
Cash flows= $5,000,000 for 50 years
Opportunity cost= 7%
First, we need to calculate the Future Value of the cash flow stream using the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual cah flow
FV= {5,000,000*[(1.07^50) - 1]} / 0.07
FV= $2,032,644,647
Now, the present value:
PV= FV / (1+i)^n
PV= 2,032,644,647 / (1.07^50)
PV= $69,003,731.47