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Question: If an investment costing $2,000 is expected to generate real cash flows of $900 p.a. for three years, prices are expected to increase at
Question:
If an investment costing $2,000 is expected to generate real cash flows of $900 p.a. for three years, prices are expected to increase at a rate of 10% p.a., and the nominal rate of return is 15%, what is the net present value of the investment?
Could you show me the working for this in deriving the answer ? I know this an NPV question but not sure how to solve when there is an "expected increase at a rate of 10%" . thank you!
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