Comparing real vs nominal cash flows Your team plans...
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Comparing real vs nominal cash flows Your team plans to construct a new airplane with free hobby club resources. The cash flow from leasing it out to businesses for surveillance is $4000 per year. The cash flow will increase by the rate of inflation every year, which is expected to grow at a rate of 3%. The discount rate is 10%. The life of this plane is 4 years. If you consider the real rate of interest, then the discounting factor will be real too. Real rate of interest =1+inflation1+nominal1=+1=
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