Complete the following table. Assume that the real interest rate is 3% per year, and inflation...

  

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Complete the following table. Assume that the real interest rate is 3% per year, and inflation is expected to be constant at 2% per year. Recall that nominal cash flows must be discounted using nominal rates, and real cash flows must be discounted using real rates. (7 marks) Year 0 12 3 4 Net present value Discount rate Nominal cash flow -100,000 + 12,000 +22,000 +15,000 +10,000 Real cash flow -100,000 3% Complete the following table. Assume that the real interest rate is 3% per year, and inflation is expected to be constant at 2% per year. Recall that nominal cash flows must be discounted using nominal rates, and real cash flows must be discounted using real rates. (7 marks) Year 0 12 3 4 Net present value Discount rate Nominal cash flow -100,000 + 12,000 +22,000 +15,000 +10,000 Real cash flow -100,000 3%

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