Given the cash flows in actual dollars provided in the following table, convert the cash flows to
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Given the cash flows in actual dollars provided in the following table, convert the cash flows to equivalent cash flows in constant dollars if the base year is time 0. Assume that the market interest rate is 16% and that the general inflation rate (f̅) is estimated at 4% per year.
n Cash Flow (in Actual Dollars)
0……………………..$20,500
4……………………..$41,500
5……………………..$36,500
7……………………..$55,500
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