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Hi John
This is regarding International Investment Appraisal!We use the purchasing power parity (inflation) to calculate the future spot rates! But why don’t we include the inflation while calculating the cash flows of sales etc like in other NPV calculations??
The two things are completely separate.
We normally do take account of inflation when calculating the cash flows – if you are referring to a specific question then say which one because it must be due to something specific in the wording of the question.
Have you watched my free lectures working through an example of international’s investment appraisal?
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