Accounting for inflation in DCF, December 2018 exam Q.3

This topic has 1 reply, 2 voices, and was last updated 5 years ago by John Moffat.

Viewing 2 posts - 1 through 2 (of 2 total)

Author
Posts
August 27, 2020 at 12:43 pm #582309
brianthomas
Member
- Topics: 4
- Replies: 5
(Sorry to bother you again – AFM exam 2 weeks tomorrow!)
John, in the examiner’s answer to this question, why are the 4 years of operating cash flows left at their nominal amounts and not uplifted by the (differing) inflation rates given in the question?
Many thanks, Brian
August 27, 2020 at 3:37 pm #582346
John Moffat
Keymaster
- Topics: 57
- Replies: 54837
The question does not say that the flows are at current prices and therefore the estimates must have already taken inflation into account.
The inflation only applies to the working capital.
Author
Posts

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.