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A farm can invest $73,000 and expect nominal annual cash flows of $31,000 for three years (from year 1 to year 3). The expected inflation

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A farm can invest $73,000 and expect nominal annual cash flows of $31,000 for three years (from year 1 to year 3). The expected inflation rate is 4% while the interest rate net of inflation is 9%. Complete the table below with the values of the real net cash flows and the present value of the real net cash flows accounting for inflation using BOTH the approximate and the correct adjustments. Should the company invest? Explain briefly (two sentences max). Year PV Real Net CF PV Real Net CF Net CF Real Net CF (approximate) (Correct) 0 -73.000 1 31.000 2 31.000 31.000

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