The equipment used on a 4-year project will be sold at the end of the project (in Year 5) for $600 in nominal terms.  If the expected inflation rate is 3.7% p.a., what is the real value of the equipment's salvage value? Question 5Answer a. $538 b. $482 c. $519 d. $500

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
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The equipment used on a 4-year project will be sold at the end of the project (in Year 5) for $600 in nominal terms.  If the expected inflation rate is 3.7% p.a., what is the real value of the equipment's salvage value?

Question 5Answer

a.
$538
b.
$482
c.
$519
d.
$500
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