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Quote from BPP text:
“When all costs and benefits rise at the same rate of price inflation, real values are the same as current day values, so that no further adjustments need to be made to cash flows before discounting.”
Is this another way of saying that when all costs and benefits rise at the same rate of price inflation, NPV will be the same whether calculated from actual cash flows at nominal discount rates or real cash flows at real discount rates?
Or is it saying something else entirely?Hi Polldoll,
I would say yes, that is what it reads like. Im just covering this area however I am using Kaplan.
Ive not come accross anything similar in my notes.
John is very good in his lectures he maybe can explain to us 🙂Changing subject slightly, his lecture on IRR was far betterthan any textbook Ive got!! lol
If you get a difinitive answer let us know
Best of luck
🙂
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