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Finance: 5 year cash flow real present value

A project anticipates net cash flows of $10,000 at the end of year one, with such amount growing at the expected 5% rate of inflation over the subsequent four years. Calculate the real present value of this five-year cash stream if the firm employs a nominal discount rate of 15%.

Solution Summary

This solution shows step-by-step calculations to determine the present value of growing annuity.