Estimate the company real cost of capital

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Reference no: EM131188030

A new project under consideration is expected to have the following nominal cash flows of $11000, $12000, $13000, $14000, $15000 in years 1 through 5. The company’s nominal cost of capital is 11%. The expected inflation rate is 3.5%.

(a) Estimate the company’s real cost of capital.

(b) Estimate the real cash flows on this project.

Reference no: EM131188030

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