The answer to this question completely neglects interest cash flows (outflows) of $240,000 per year in the NPV calculation. Does anyone know why they are excluded?
The other items listed all have specific inflation rates with the exception of this. At the bottom you are given the real and nominal after tax costs of capital, so I used the Fisher formula to calculate the general rate of inflation as 5% (to the nearest percent) and then inflated the interest charges at this rate. Hence I got the answer wrong.
Anyone?
The other items listed all have specific inflation rates with the exception of this. At the bottom you are given the real and nominal after tax costs of capital, so I used the Fisher formula to calculate the general rate of inflation as 5% (to the nearest percent) and then inflated the interest charges at this rate. Hence I got the answer wrong.
Anyone?