The appropriate real discount rate for phillips is 10, Ask an Expert

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Phillips Industries runs a small manufacturing operation. For this fiscal year, it expects real net cash flows of $164,000. Phillips is an ongoing operation, but it expects competitive pressures to erode its real net cash flows at 5 percent per year in perpetuity. The appropriate real discount rate for Phillips is 10 percent. All net cash flows are received at year-end.

Required:

What is the present value of the net cash flows from Phillips's operations?

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Category:- Basic Finance
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