Calculate the pv of mr decos payment

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Reference no: EM13972936

"Mr. Art Deco will be paid $100,000 one year hence. This is a nominal flow, which he discounts at an 8% nominal discount rate:

PV = 100,000/1.08 = $92,593

The inflation rate is 4%.

Calculate the PV of Mr. Deco's payment using the equivalent real cash flow and real discount rate. You should get exactly the same answer as he did.

Reference no: EM13972936

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