Net cash flow Present value at 20% Net present value ($ thousands) 0 1 -13,100 -1,534 -13,100 -1,278 3,399 (sum of PVs) Period 2 2,997 2,081 3 4 5 6 7 6,373 10,584 3,688 5,104 10,035 5,807 4,033 1,945 3,319 926 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
Net cash flow Present value at 20% Net present value ($ thousands) 0 1 -13,100 -1,534 -13,100 -1,278 3,399 (sum of PVs) Period 2 2,997 2,081 3 4 5 6 7 6,373 10,584 3,688 5,104 10,035 5,807 4,033 1,945 3,319 926 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:Net cash flow
Present value at 20%
Net present value
(s thousands)
Period
0
-13,100
1
2
3
4
5
6
7
-1,534
2,997
6,373
10,584
10,035
5,807
-13,100
-1,278
2,081
3,688
5,104
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
NPV
$
(13,100)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education