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hi
this is Jubaer
can anyone tell me the consequences of, if the inflation rate goes negative??
thank you.Since you asked in the Ask the Tutor Forum, ‘anyone’ will always be me 🙂
It depends in what context you are asking.
If you are talking about getting the expected cash flows for an NPV calculation then just as if there is expected inflation you will increase the expected nominal cash flows, then similarly if there is expected deflation you will reduce the expected nominal cash flows. (Although deflation is extremely unlikely to be relevant in the exam).
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