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1- Consider the following project's after-tax cash flow and the expected annual inflation rates during the project period. a) Convert the cash flows in actual

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1- Consider the following project's after-tax cash flow and the expected annual inflation rates during the project period. a) Convert the cash flows in actual dollars into equivalent constant dollars with the base year 0. (complete the table for constant dollars cash flow) b) If the annual real interest rate is 6,3%, what is the present worth of the cash flow? Is this project acceptable? Final answer section (b): actual cash flow year amount 0 $395.000 1 $95.000 2 $ 45,000 3 $ 250,000 4 530,000 5 S 50,000 Constant dollars cash flow year amount 0 1 2 3 4 5 Inflation rate 396 year 1 2 3 4 5 2% 19 6%

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