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A company is considering an investment in a project costing $5,000. The estimated net cash flows for the project (in nominal terms) are as follows.
A company is considering an investment in a project costing $5,000. The estimated net cash flows for the project (in nominal terms) are as follows. Year Net Cash Flows 1 $2,500 2 $3,000 $2,000 The opportunity cost of capital (real) is 10% p.a. The anticipated inflation rate is 5% p.a. for the first year and is expected to increase to 7% p.a. for the following two years. Calculate the net present value of the project and state the appropriate decision
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