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WACC and NPV Changes Due to Inflation

This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.

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August 26, 2021 at 2:54 am #632948
alphabetawacc
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Hi everyone, can someone kindly help me with this problem?
Explain what would happen to the WACC and the NPV of a firm’s project if the country where the firm is based’s inflation rate were to unexpectedly increase. Why would these things happen?
August 26, 2021 at 7:54 am #632985
John Moffat
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You have asked this in the Ask the Tutor Forum and therefore ‘everyone’ is me 🙂
Neither the WACC nor NPV are examinable in Paper FA. Paper FA is Financial Accounting which is nothing to do with discounted cash flow.
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