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F9 NPV with Inflation

This topic has 3 replies, 2 voices, and was last updated 11 years ago by John Moffat.

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November 13, 2014 at 9:53 am #209563
Bernard
Member
- Topics: 1
- Replies: 1
Kindly could someone assist me me how to get Inflated figures say unit price for Jan Feb and March were 50,060,45 respectively and inflation on the unit prices is 5%
November 13, 2014 at 10:14 am #209577
John Moffat
Keymaster
- Topics: 57
- Replies: 54831
Firstly, you will never be asked to calculate an NPV on a monthly basis.
Secondly, it depends whether or not the flows are quoted at current prices.
Thirdly, if depends whether the inflation is 5% per annum, or 5% per month.
Best is for you to watch the free lecture on Investment Appraisal with inflation and tax.
November 13, 2014 at 11:30 am #209593
Bernard
Member
- Topics: 1
- Replies: 1
how do one computes inflated costs?
November 13, 2014 at 3:26 pm #209642
John Moffat
Keymaster
- Topics: 57
- Replies: 54831
You multiply the current price flow by (1+i)^n where i is the rate of inflation and were n is the timing of the cash flow.
However, flows are not always given in current prices.
Again – you should watch the free lecture. I cannot type out the whole lecture here!
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