August 2004
Intermediate to advanced
656 pages
15h 28m
English
Assuming that the net cash-flow stream for Mr. Kinkaid's proposed venture (Table 8.2 in Chapter 8) is in actual dollar terms, it can be used as an example of converting a cash-flow stream from actual dollars to constant dollars. Using 6.5% as the average annual inflation rate for the 7 years of the study, Table 13.3 shows the actual dollar cash-flow stream converted to constant dollars in year 0 (beginning of the planning horizon) terms.
| Year | Actual Dollar Net Cash-Flow Stream | Inflation Conversion (P/F,6.5,n) | Constant Dollar Net Cash-Flow Stream |
|---|---|---|---|
| 0 | $0 | 0.9390 | $0 |
| 1 | –$3421 | 0.8817 | –$3016 |
| 2 | –$2671 | 0.8278 | –$2211 |
| 3 | $329 | 0.7773 ... |
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