Payment using equivalent real cash flow-real discount rate

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Reference no: EM13915158

"Mr. Art Deco will be paid $100,000 one year hence. This is a nominal flow, which he discounts at an 8% nominal discount rate: PV = 100,000/1.08 = $92,593 The inflation rate is 4%. Calculate the PV of Mr. Deco’s payment using the equivalent real cash flow and real discount rate. (You should get exactly the same answer as he did.) "

How do you calculate or what is the formula for the inflation of 4%?

Reference no: EM13915158

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