[javed]

but my question is why we cannot do it in nominal cash flow while it is in perpetuity….and if it is then why in Kaplan book they used nominal rate…

[javed]

thank u sir!! sorry for using capital letter!

[javed]

SIR,
AM CO WILL RECEIVE A PERPETUITY STARTING IN 2 YEARS TIME OF 10,000 PER ANNUM,INCREASING BY THE RATE OF INFLATION 2%.

WHAT IS THE PERPETUITY ASSUMING A MONEY COST OF CAPITAL OF 10.2%?

MY QUESTION IS WHY THEY USED REAL COST OF CAPITAL IN THE ANSWER?

[javed]

8(1-.35) *760000=3952*3.53=139487 (5.2%@4y=3.53)
80000* .816=653171 …………………….

irr=6.47………

r8 or wrong?????

[Author]

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