Chapter 1, Section 4 - Purdue University

Remember that depreciation is a nominal quantity, and thus must be discounted at the nominal rate. To find the nominal rate, use the following equation: 1+ Real Discount Rate = (1+Nominal Discount Rate) / (1+Inflation Rate) 1.08 = (1+Nominal Discount Rate) / (1.05) Nominal Discount Rate = 0.134 ................
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