$250,000 $37,500 $480,000 $450,000 The CFO of the company believes that an appropriate annual interest rate on this investment is 6.5%. What is the present value of this uneven cash flow stream, rounded to the nearest whole dollar

$84.14

Explanation:

terminal value at year 9 = Div₁₀ / (Re - g) = $14 / (12% - 6%) = $233.33

now we need to find the present value:

present value = future value / (1 + r)ⁿ = $233.33 / (1 + 12%)⁹ = $84.14

The terminal value considers the value of the future dividends as a perpetuity. as we use the dividend growth model formula to calculate it.