($ thousands) Net cash flow Present value at 19% Net present value 0 1 3 -13,700 -13,700 3,541 (sum of PVs) -1,594 -1,339 Period 2 3,057 6,433 10,644 2,159 3,817 4 5 6 7 5,308 10,095 5,867 4,230 2,066 3,379 1,000 Restate the above net cash flows in real terms. Discount the restated cash flows at a real discount rate. Assume a 19% nominal rate and 11% expected inflation. NPV should be unchanged at +3,541, or $3,541,000. Note: Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers in thousands rounded to the nearest whole number. Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Real Net Cash Flows NPV
($ thousands) Net cash flow Present value at 19% Net present value 0 1 3 -13,700 -13,700 3,541 (sum of PVs) -1,594 -1,339 Period 2 3,057 6,433 10,644 2,159 3,817 4 5 6 7 5,308 10,095 5,867 4,230 2,066 3,379 1,000 Restate the above net cash flows in real terms. Discount the restated cash flows at a real discount rate. Assume a 19% nominal rate and 11% expected inflation. NPV should be unchanged at +3,541, or $3,541,000. Note: Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers in thousands rounded to the nearest whole number. Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Real Net Cash Flows NPV
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:($ thousands)
Present value at 19%
Net cash flow
Net present value
0
1
4
-13,700
-1,594
-13,700 -1,339
3,541 (sum of PVs).
Period
2
3
6
3,057 6,433 10,644 10,095 5,867
2,159 3,817 5,308 4,230 2,066
5
7
3,379
1,000
Restate the above net cash flows in real terms. Discount the restated cash flows at a real discount rate. Assume a 19% nominal rate
and 11% expected inflation. NPV should be unchanged at +3,541, or $3,541,000.
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
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