Consider the following projects after-tax cash flow and the expected annual inflation rates during the project period.

1. Convert the cash flows in actual dollars into equivalent constant dollars with the base year 0. (complete the table for constant dollars cash flow)
2. If the annual real interest rate is 15%, what is the present worth of the cash flow? Is this project acceptable?

Final answer section (b):

actual cash flow
year	amount
0	- $295,000
1	$ 95,000
2	$ 45,000
3	$ 250,000
4	$ 30,000
5	$ 50,000

Constant dollars cash flow
year	amount
0
1
2
3
4
5

year	Inflation rate
1	8%
2	2%
3	2%
4	2%
5	6%