Assume a new investment project is expected to generate $1,000 and $1,000 in free cash flows for two years (2021 (first year) and 2022 (Second year)), respectively. The forecasted annual inflation is 2 % a year. Show (4) the actual (or real) free cash flow (after inflation rate is considered) in 2021 (First Year) and 2022 (Second Year). If WACC is 10%, what is the (5) present value of the investment (Investment year is 2020)
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