Effects of Inflation: Refer to the data in exercise 15 15. a. What is the net present
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Effects of Inflation: Refer to the data in exercise 15— 15.
a. What is the net present value of the project if the inflation rate is 10 percent and the discount rate under no inflation is 12 percent? (Hint: Inflation affects both cash flows and the nominal rate of interest.)
b. Compare your answer in
(a) to the result you got in part
(b) of exercise 15-15. Explain why these two answers are the same (or different).
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