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Assume That an Investment of $1000 Is Expected to Generate

Question 38

Multiple Choice

Assume that an investment of $1000 is expected to generate cash flows of $500 at constant prices at the end of each of three years.Also,assume that prices are expected to increase at the rate of 10% p.a.and that the nominal rate of return is 15% p.a.What is the project's NPV?


A) $337
B) $373
C) $377
D) None of the given options.

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