($ thousands) Period Net cash flow Present value at 20% Net present value 0 -13,100 1 2 3 4 5 6 7 -1,534 -13,100 -1,278 2,997 2,081 6,373 3,688 10,584 10,035 5,104 5,807 4,033 1,945 3,319 926 3,399 (sum of PVs) Restate the above net cash flows in real terms. Discount the restated cash flows at a real discount rate. Assume a 20% nominal rate and 10% expected inflation. NPV should be unchanged at +3,399, or $3,399,000. Note: Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers in thousands rounded to the nearest whole number. Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Real Net Cash Flows $ (13,100) NPV
($ thousands) Period Net cash flow Present value at 20% Net present value 0 -13,100 1 2 3 4 5 6 7 -1,534 -13,100 -1,278 2,997 2,081 6,373 3,688 10,584 10,035 5,104 5,807 4,033 1,945 3,319 926 3,399 (sum of PVs) Restate the above net cash flows in real terms. Discount the restated cash flows at a real discount rate. Assume a 20% nominal rate and 10% expected inflation. NPV should be unchanged at +3,399, or $3,399,000. Note: Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers in thousands rounded to the nearest whole number. Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Real Net Cash Flows $ (13,100) NPV
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:($ thousands)
Net cash flow
Present value at 20%
Net present value
Period
0
-13,100
1
2
3
4
5
6
-13,100
-1,534
-1,278
2,997
6,373
2,081
3,688
10,584
5,104
10,035
5,807
7
3,319
4,033
1,945
926
3,399 (sum of PVs)
Restate the above net cash flows in real terms. Discount the restated cash flows at a real discount rate. Assume a 20%
nominal rate and 10% expected inflation. NPV should be unchanged at +3,399, or $3,399,000.
Note: Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers
in thousands rounded to the nearest whole number.
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Real Net Cash Flows
NPV
$
(13,100)
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