Assume the cash flows on the left are nominal cash flows


Assignment -

Part A -

Assume the cash flows on the left are nominal cash flows. Also, assume the expected inflation rate is 3.48%.

(a) Determine the NPVs of both projects

(b) Determine the annualized NPV in constant dollars for each project. (This is also sometimes called the real EAA.)

 (c) Determine the present value of the real perpetuity in constant dollars for each project.

Part B -

(a) Determine the NPV of this project.

(b) Do some sensitivity analysis to determine how NPV differs as the following variables change.

(c) Determine NPV under the Best Case, Normal Case, and Worse Case scenarios based on the possible values for the variables listed in part (b) above.

Note - For more details see the attached file.

Attachment:- Assignment File.rar

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Accounting Basics: Assume the cash flows on the left are nominal cash flows
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