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