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Required information Exercise 16-38 & 16-39 Inflation and Capital Budgeting (Appendix B) (LO 16-10) [The following information applies to the questions displayed below.] The
Required information Exercise 16-38 & 16-39 Inflation and Capital Budgeting (Appendix B) (LO 16-10) [The following information applies to the questions displayed below.] The state's Secretary of Education is considering the purchase of a new computer for $100,000. A cost study indicates that the new computer should save the Department of Education $30,000, measured in real dollars, during each of the next eight years. The real interest rate is 20 percent and the inflation rate is 10 percent. As a governmental agency, the Department of Education pays no taxes. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Exercise 16-38 Part 2 2. Using cash flows measured in real dollars, compute the net present value of the proposed computer. Use a real discount rate equal to the real interest rate. Net present value
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