Question
A project has the following expected net cash flows associated with it: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 -R
A project has the following expected net cash flows associated with it:
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| -R 800 000 | R150 000 | R200 000 | R400 000 | R100 000 | R100 000 |
The cash flows are expressed in real terms. Adjust the cash flows to nominal terms assuming constant inflation of 5% and calculate the NPV of the project. The company in question has a WACC of 10%.
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