2007 Q1?????

I will start by saying i know this one has been kicked around and have used the search function. It is stated they have a planning horizon is 35y. n=35 pv 4mil pmt 205k fv 3mil compute i = 4.84 4.84 + inflation 2.5 = 7.3 However, how/why do you ignore the shorterm…205000/4mil = 5.13 +2.5 inflation = 7.63% There always seems to be a protection of principle issue with these questions and their s/t spending needs require a larger return…which covers the longterm requirment. Am i the only one with this issue??