<span>Ans : $ 5158. First, let us compare the Present Value of the investment with the PV of the future cash flows, discounted at 12%. The PV of 1,600, N 1, R 12%, is 1,429. The PV of 2,000, N 2, is 1,594, and the PV of 3,000, N 3, is 2,135. That's a total of 5,158.</span>
Menu costs of inflation refer to the costs of having to modify the prices as a result of the frequent change in the price levels of the products that force businesses to make constant updates on their sales prices. According to this, the answer is that this is an example of menu costs of inflation as the grocery store has to update the prices of the products frequently because of the high rate of inflation.
An escalation clause is a clause in a lease or contract that guarantees a change in the agreement price once a particular factor beyond control of either party affecting the value has been determined. An important example of this is a contract that adjusts for inflation.
