Good Morning!
We are not inflating the given labor/component/sales costs by the inflation of 20% in year 1.
Is it because the costs given ARE for year 1?
where as normally we are given the costs at year 0 which requires the figures to be inflated?
regards
Ask the Tutor ACCA AFM
AVTO, Dec 03
8y ago#1Yes - the costs are given for year 1 and so it is only later years that inflate.
This is very common in the exam. We only inflate in the first year if the costs are given at current prices.
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