Question
Mr. Art Deco will be paid $100,000 one year hence. This is a nominal flow, which he discounts at an 8% nominal rate: PV =
Mr. Art Deco will be paid $100,000 one year hence. This is a nominal flow, which he discounts at an 8% nominal rate:
PV = 100,000/1.08 = $92,593
The inflation rate is 4%.
Calculate the PV of Mr. Decos payment using the equivalent real cash flow and real discount rate. (You should get exactly the same answer as he did).
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Handbook Of Heavy Tailed Distributions In Finance
Authors: S.T Rachev
1st Edition
0444508961, 9780444508966
