Equivalent real cash flow and real discount rate

Reference no: EM13202417

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.

Reference no: EM13202417

Questions Cloud

What is live theaters total revenue function : The inverse demand curves for each of the two groups are given below. The marginal cost (which equals the average variable cost) of serving an additional patron, either senior or everyone else, is equal to $4. Fixed costs are equal to $1000.

What dimensions will give the largest printed area : A poster is to have an area of 170 in2 with 1 inch margins at the bottom and sides and a 2 inch margin at the top. What dimensions will give the largest printed area?

What is the straight line distance : If Tom Bombadil's house is 30 miles east of Hobbiton and 16 miles south, what is the straight line distance (omit units)?

How forum-selection clause related to personal jurisdiction : Mable has balanced the cost against the benefit of bringing a lawsuit against Harvey. She has decided to sue him for monies owed to her as per a contract the two entered into. However, she would much rather settle her case at the pretrial hearing.

Equivalent real cash flow and real discount rate : Calculate the PV of Mr. Decos payment using the equivalent real cash flow and real discount rate

How much money will be spent on business space and utilities : Twenty-five percent of your budget will be used to rent business space and pay for utilities. Write an algebraic expression that indicates how much money will be spent on business space and utilities. Express the percentage as a decimal. Do not so..

Find the lengths of both circular arcs on the unit circle : Find the lengths of both circular arcs on the unit circle connecting the point and the point that makes an angle of with the positive horizontal axis.

Find the dimensions of the garden minimizing the cost : landscape architect wishes to enclose a rectangular garden on one side by a brick wall costing $27 per foot and on the other three sides by a metal fence costing $9 per foot. If the area of the garden is 450 ft2, find the dimensions of the garden ..

How much interest will he earn after one year : Franklin has $2,500 in a savings account that pays interest at the rate of 4% annually. How much interest will he earn after one year?

User Account

All Pages