What is the present value of a perpetual stream of cash flows that pays ​$   7,500 at the end of year one and the annual cash flows grow at a rate of   2​% per year​ indefinitely, if the appropriate discount rate is   9​%?  What if the appropriate discount rate is   7​%?

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A: Future value is the worth of a certain deposit made today at a specific time in future.

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.