Chapter 7: Net Present Value and Capital Budgeting

The nominal cash flow at year 5 is $158,226. 7.15 Since the problem lists nominal cash flows and a real discount rate, one must determine the nominal discount rate before computing the net present value of the project. 1 + Real Discount Rate = (1 + Nominal Discount Rate) / (1 + Inflation Rate) 1.14 = (1+ Nominal Discount Rate) / (1.05) ................
................