Some economists are predicting an inflationary economy in th

Some economists are predicting an inflationary economy in the fairly near future. If you have a Minimum Attractive Rate of Return (MARR) for a given investment of 8% in today’s dollars, what discount rate would you use evaluate investment options assuming an inflation rate of 6% in the future? Answer as a percent.

Solution

Discount rate = MIRR + Inflation rate

                      = 8 + 6

                      = 14%