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In the question which provide the inflation rate and increasing rate, why not we multiply by increasing rate and inflation rate like:
Revenue in year 1 is calculated:
10,000*MP115,200*1.05*1.08
Thanks.
The general inflation rate of 8% is the average inflation rate. Just as in real life, it does not mean that everything inflates at 8% – some things inflate more and some things inflate less.
Here, you are specifically told that some things inflate at 10% and some things inflate at 5%, so those are the rates to apply to those items. You would only apply 8% to any items that you were told inflated at the general rate of inflation.
You can find lectures working through the whole of this question linked from the following page:
https://opentuition.com/acca/afm/afm-revision-lectures/
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