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    Opportunity cost of capital

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    Please provide assistance with the attached (both pages- 4 and 5).

    Page 4.
    7. Mr. Garou will be paid 100,000 euros one year hence. There is a nominal flow, which he discounts at an 8 percent nominal discount rate...

    Please see attached.

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    Inflation factor 4% 1.04
    Equivalent Real Cash Flow
    -92593 96153.84615

    Real Discount rate =4%

    1. A project's depreciation rate does not depend on the future inflation rate. It will depend on the method of the
    depreciation, type of the project, life of the asset, scrap value FALSE

    2. FALSE It should not take into account the interest on the borrowed capital. As Dicscounted Cash Flow method already takes into account the cost of ...

    Solution Summary

    The solution explains various financial concepts with the help of illustrations.