Problem:
You wrote a piece of software that does a better job of allowing computers to network than any other program designed for this purpose. A large networking company wants to incorporate your software into their systems and is offering to pay you $535,000 today, plus $535,000 at the end of each of the following six years for permission to do this.
Required:
Question: If the appropriate interest rate is 7 percent, what is the present value of the cash flow stream that the company is offering you?
Note: Please provide reasons to support your answer.