A Project's Cash Flows Will Grow 1

question 25

Multiple Choice

A project's cash flows will grow 1.5% faster than the rate of inflation forever. The first cash flow will be $100 and will occur at the end of the year. The inflation rate is a constant 3.2%,
And the nominal interest rate is 10%. What is the value of this project?

• A)$1,887
• B)$2,941
• C)$5,263
• D)$1,471

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