Answer:
PV of the growing annuity: 3,129,415.72
Explanation:
We need to solve for the present value of a growing annuity:
[tex]FV = \frac{1-(1+g)^{n}\times (1+r)^{-n} }{r - g}[/tex]
g 0.01
r 0.015 (18% / 12 months)
C 140,000
n 24
[tex]\frac{1-(1+0.01)^{24}\times (1+0.0015)^{-24} }{0.18 - 0.01}[/tex]
FV = 4,473,508.58
Now, to get the present value we solve for the present value of the future value:
[tex]\frac{4,473,508.58 }{1.015^{24} }[/tex]
3,129,415.72