Escalated dollar analysis and constant dollar analysis

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Reference no: EM131328677

Calculate the cumulative present value of the following cash-flow stated in today’s dollars using:

a) Escalated dollar analysis

b) Constant dollar analysis

Market interest rate is 10%

Inflation rate is 8%

Escalation rates are:

• 10% for costs (C)

•12% for revenues (R)

C0 = $50,000 C1 = $80,000

R2 = $80,000(on years 2)

R3 = $80,000 (on years 3)

Reference no: EM131328677

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