Question: SWF is considering a project that is expected to generate real cash flows of $10 million at the end of each year for 5 years.

SWF is considering a project that is expected to generate real cash flows of $10 million at the end of each year for 5 years. The initial outlay/investment required is $25 million. A nominal discount rate is 9.2% is appropriate for the risk level. Inflation is 5%

Justify that NPV will remain the same under nominal and real cash flows calculations.

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