Consider a situation, where (a) the equalpayment cash flow of $1,000 in constant dollars over three years

Question:

Consider a situation, where (a) the equal‐payment cash flow of $1,000 in constant dollars over three years is converted from (b) the equal‐payment cash flow in actual dollars over three years at an annual general inflation rate of f̅ = 3.8%. Also, i = 9%. What is the amount A in actual dollars equivalent to A′ = $1,000 in constant dollars?

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