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Hello Sir,
In chapter 8 example 6 ,
in part b you have used the The Fisher formula (1 + i) = (1 + r) (1 + h)to remove the effect of inflation from the cost of capital rate
you said that the cost of capital is 15% but here how do we know that this rate is with inflation since the inflation rate is given separately so how can we assume that the rate of 15% is with inflation.
Thanks.
If it is the rate without inflation then the question will refer to it as the real cost of capital.
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