Question: 3 . You have won a contest and will receive cash flows of $ 2 , 5 0 0 a year in real terms for

3 .

You have won a contest and will receive cash flows of $

2, 500

a year in real terms for the next

3

years. Each payment will be received at the end of the period with the first payment occurring one year from today. The relevant nominal discount rate is

6.3

percent and the inflation rate is

4.5

percent. What are your winnings worth today? What are the actual cash flows that you will receive

(

.

.,

nominal cash flows

) ?

What are your nominal cash flows worth today?

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