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2) Suppose asset X is expected to generate the following cash flows: $10 today, and then 6% annual growth in each of the next four
2) Suppose asset X is expected to generate the following cash flows: $10 today, and then 6% annual growth in each of the next four years (half of that growth due to expected inflation). A) If the nominal risk-free rate is 5%, and you require a 3% risk premium to hold asset X, what would you pay for asset X today? B) If the nominal risk-free rate falls by 1% (all else equal), what would you pay for asset X - or do you need more information to answer that
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