A nominal cash flow occurring in year 2 is 52,000.If the inflation rate has been 10% per year, calculate the real cash flow for year-2.

Name: A nominal cash flow occurring in year 2 is 52,000.If the inflation rate has been 10% per year, calculate the real cash flow for year-2.
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Question

Quizplus · Accepted Answer

Real cash flow = (nominal cash flow / (1+inflation rate))^n
Real cash flow = (52,000 / (1+0.1))^2
Real cash flow = 42,975.27, which when rounded to the nearest dollar is $42,975. Therefore, the correct answer is option C.

A Nominal Cash Flow Occurring in Year 2 Is 52,000