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 intial outlay/investment required is $25 million. a nominal discount rate of 9.2% is appropriate for the risk level. inflation is 5% 1. you are company's financial analyst. the CFO has asked you to calculate the NPV using a schedule of future nominal cash flows. 2. justify the NPV will remain the same while rearranging for inflation and real cash flows calculations.
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