Impact of inflation on investmentsPersonal Finance ProblemYou are interested in an investment project that costs

$45,750 initially. The investment has a 55-year horizon and promises future end-of-year cash inflows of $12,200, $12,810, $11,590, $9,150, and $8,540, respectively. Your current opportunity cost is 6.63% per year. However, the Fed has stated that inflation may rise by 1.5 % or may fall by the same amount over the next 55 years.

Assume a direct positive impact of inflation on the prevailing rates (Fisher effect) and answer the following questions: (Assume that inflation has an impact on the opportunity cost, but that cash flows are contractually fixed and are not affected by inflation.)

a. The net present value of the investment under the current required rate of return is $

b. The net present value of the investment under a period of rising inflation is $

c. The net present value of the investment under a period of falling inflation is $