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Can you please tell how to get the sales revenue and direct vodt using inflation rates given in the question.
I am not getting itThe sales at time 1 in current prices are 23.03
The inflation is 8% per year.
Therefore the actual sales at time 1 are 23.03 x 1.08 = 24.87The sales at time 2 in current prices are 36.60
Therefore the actual sales at time 2 are 36.60 x 1.08^2 = 42.69The sales at time 3 in current prices are 49.07
Therefore the actual sales at time 3 are 49.07 x 1.08^3 = 61.81It is the same procedure for the 4th year and also for the variable costs.
I do suggest that you watch my free lectures (and if needed the relevant lectures for Paper F9, because this is revision from Paper F9. In the F9 lectures I explain why we do this, because it is vital for the exam that you understand why and are not simply following a rule.)
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