The Inflation Rate Is 3

question 30

Multiple Choice

The inflation rate is 3.5% a year, and the real interest rate is -2% a year. If a project will provide a perpetual nominal cash flow of $1,000 a year, what is the project's value? Round
Answers to the nearest hundredth of a percent and to the nearest $10.

• A)$69,930
• B)$17,950
• C)$10,200
• D)none of the above

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Definitions:

Catharsis

The process of releasing, and thereby providing relief from, strong or repressed emotions.

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A psychological phenomenon where negative emotions caused by one source are redirected and taken out on a different, often unrelated target.

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A therapeutic approach designed to address severe behavioral problems in juveniles by intervening across multiple contexts, such as family, school, and community.