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2. The following cash flows are in actual dollars. Assume that the market interest rate is 12% and that the general inflation rate (f) is

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2. The following cash flows are in actual dollars. Assume that the market interest rate is 12% and that the general inflation rate (f) is 5% per year. Convert to an equivalent cash flow in constant dollars if the base year is time 0. Keep cash flows at the same point in time - that is, years 0, 4, 5, and 7. (10 points) Cash Flow (in Actual $) n 0 25,000 4 35000 5 45000 7 55000

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