The initial selling price in Year 1 is expected to be $100 per unit, before increasing with the rate of inflation annually.
sir, why are we not considering inflation for the first year which is 4% in our calculus?
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BPP kit 13. Fernhurst sep/dec 16
5y ago#1The question specifically says that the selling price in the first year will be $100. Therefore it will only inflate in later year. It would only inflate in the first year if it had been quoted at current prices (and I do specifically mention this in my free lectures on investment appraisal with inflation as something to watch out for :-) )
Thanks a lot sir.
5y ago#3You are welcome :-)
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