Refer to the data given in the preceding problem for Pensacola Cablevision Company.

Required:

1. Compute the price index for each year from 20x1 through 20x7, using 1.0000 as the index for 20x0.

2. Prepare a schedule of after-tax cash flows measured in real dollars.

3. Compute the net present value of the proposed new satellite dish using cash flows measured in real dollars. Use a real discount rate equal to the real interest rate.