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Real Cash Flows: PV of Mr. Art Deco's Payment

Mr. Art Deco will be paid $100,000 one year hence. This is a nominal flow, which he discounts at an 8% nominal discount rate:

PV = 100,000/1.08 = $92,593

The inflation rate is 4%.

find out the PV of Mr. Deco's payment using the equivalent real cash flow and real discount rate.

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M926431

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