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A project consists of a series of cash outflows in the first few years followed by a series of positive cash inflows.The total cash inflows exceed the total cash outflows.The project was originally evaluated assuming a zero rate of inflation.If the project were re-evaluated on the assumption that the cash flows were subject to a positive rate of inflation,what would
be the effect on the payback period and the IRR?whether they will increase or decrease?
Tell me what you think the answer is!
(With positive inflation the cash flows will be higher)
