Question: The inflation rate is 1.5% per year. The real rate of return is 2.0% per year. A perpetuity project that paid $100 this year will

The inflation rate is 1.5% per year. The real rate of return

is 2.0% per year. A perpetuity project that paid $100 this year

will provide income that grows by the inflation rate. Show what

this project is truly worth. In both nominal and real terms.

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