Calculating Investment Appraisal with Inflation rates

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August 20, 2018 at 7:21 pm #468649
kayanvis
Member
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I don’t know how to calculate Inflated prices when the selling price per unit are different each year. For instance:
Year 1- SP=$15/unit
Year 2- SP=$18/unit
Year 3- SP=$22/unit
Year 4- SP=$22/unit
Selling price inflation is 4% per year
P.S: I know how to calculate Inflated prices when the prices are the same. Different prices are a confusion.
Please Slove this for me?
August 21, 2018 at 6:34 am #468677
John Moffat
Keymaster
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You multiply the selling price by 1.04 for 1 year.
For 2 years you multiply the selling price by 1.04^2
and so on
This is all explained in my free lectures 🙂 The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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