Question
A project anticipates net cash flows of $10,000 at the end of year one, with such amount growing at the expected 5 percent rate of
A project anticipates net cash flows of $10,000 at the end of year one, with such amount growing at the expected 5 percent rate of inflation over the subsequent four years. Calculate the real present value of this five-year cash stream if the firm employs a nominal discount rate of 15 percent.
A. $33,522
B. $38,377
C. $43,294
D. $55,000
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
12th edition
978-0324597714, 324597711, 324597703, 978-8131518571, 8131518574, 978-0324597707
