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Question 4 9 pts Task (following on from the previous part): Suppose that the infrastructure fund now wants to adjust the above cash flows to account for a constant rate of inflation e of 1% per annum. The fund can borrow at an interest rate of 1.5% per annum. Calculate the net present value at this interest rate, allowing for inflation. Is the yield i, allowing for inflation larger or smaller than 1.5%? Answer: The formula for the net present value with inflation is, with i = 1.5% and measured in millions of [Select) at rate i. Hence the NPV.CO) = (Select] The yield will be Select) than 1.5%, as the sign changes once from [ Select Question 4 9 pts Task (following on from the previous part): Suppose that the infrastructure fund now wants to adjust the above cash flows to account for a constant rate of inflation e of 1% per annum. The fund can borrow at an interest rate of 1.5% per annum. Calculate the net present value at this interest rate, allowing for inflation. Is the yield i, allowing for inflation larger or smaller than 1.5%? Answer: The formula for the net present value with inflation is, with i = 1.5% and measured in millions of [Select) at rate i. Hence the NPV.CO) = (Select] The yield will be Select) than 1.5%, as the sign changes once from [ Select

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