Cameron is going to receive an annuity for 44 years of $31,596, and Kennedy is going to receive a perpetuity of that same amount. If the appropriate discount rate is 8%, how much more are Kennedy's cash flows worth today than Cameron's cash flows? (Do not include the dollar sign ($). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Here, we are assuming Cameron's annuity is an ordinary annuity under which Cameron or any other investor receives payments at the end of each time period over a period of time. The PV of an ordinary annuity formula is as follows:

PV = P × [{1 - [1 ÷ (1+r)]^n} ÷ r] ...................................................... (1)

Where

PVo = Present value of the ordinary annuity = ?

P = Periodic payment = $31,596

r = interest rate = 8% = 0.08

n = number of years = 44

The values above are substituted into equation (1) as follows:

PVo = $31,596 × [{1 - [1 ÷ (1 + 0.08)]^44} ÷ 0.08]

= $31,596 × [{1 - [1 ÷ (1.08)]^44} ÷ 0.08]

= $31,596 × [{1 - [0.925925925925926]^44} ÷ 0.08]

= $31,596 × [{1 - 0.0338341101277985} ÷ 0.08]

= $31,596 × [0.966165889872202 ÷ 0.08]

= $31,596 × 12.0770736234025

= $ 381,587.218205026

Therefore, the today's worth of Cameron's cash flows is $ 381,587.218205026.

2. For Kennedy

The perpetuity means Kennedy's cash will flow periodically indefinitely. The formula for the PV of a perpetuity is as follows:

PVp = P ÷ r .......................................................... (2)

Where,

PVp = Present value of a perpetuity = ?

P = Periodic payment = $31,596

r = interest rate = 8% = 0.08

The values above are substituted into equation (1) as follows:

PVp = $31,596 ÷ 0.08

= $394,950.00

Therefore, the today's worth of Kennedy's cash flows is $394,950.00.

3. How much more are Kennedy's cash flows worth today than Cameron's cash flows?

This is calculated as follows:

Difference = PVp of Kennedy - PVo of Cameron

Difference = $394,950.00 - $381,587.218205026

= $13,362.78

Therefore, Kennedy's cash flows worth today is $13,362.78 more than Cameron's cash flows worth today.