Hi all, Can someone please answer this question. Please, list all steps. Thanks! Mr. Art Deco...

Hi all,

Can someone please answer this question. Please, list all steps. Thanks!

Mr. Art Deco will be paid $150,000 one year hence. This is a nominal flow, which he discounts at a nominal discount rate of 8%.

PV = $150,000 / (1 + .08) = $138,889

The inflation rate is 5%.

Calculate the PV of Mr. Deco’s payment using the equivalent real cash flow and real discount rate. (You should get exactly the same answer as he did.) (Do not round intermediate calculations. Round your "Real cash flow" and "Present value" answers to the nearest whole dollar amount. Enter the "Real discount rate" as a percent rounded to 3 decimal places.)


Real cash flow	$
Real discount rate	%
Present value	$

Expert Solution

jeff jeffy answered 7 months ago

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