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the interest rate we use in the p4 exam is the real or nominal interest rate ?
It depends on whether you are discounting the relevant cash flows or the nominal cash flows.
Almost always we are discounting the nominal cash flows at the nominal cost of capital (not interest rate!), unless it is a perpetuity in which case we use the dividend valuation formula (which is effectively discounting the current price flows at the real cost of capital).All of this is explained in my free lectures.
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