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International investment appraisal

This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.

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May 24, 2018 at 2:54 pm #453758
tasnuva
Member
- Topics: 24
- Replies: 15
Say that there is an inflation rate for sales and we need to convert that sales figure to the appropriate currency using the exchange rate given in the question.
My question is : will we inflate both exchange rates as well as sales price?!
May 24, 2018 at 5:02 pm #453778
John Moffat
Keymaster
- Topics: 57
- Replies: 54808
Yes – you use the PPP formula given on the formula sheet (and as explained in my free lectures), but , of course, you will use the general rates of inflation which might not be the same as the inflation rate for the sales 🙂
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