"In addition, Blackbosca Co will receive a royalty payment from the investment in Üskistan, payable annually. The first year’s royalty payment is fixed at $2·5m but this will increase annually at a rate of 5% in subsequent years."
Why is the royalty payment not inflated? The question says the estimates of cashflows are inflation adjusted. However, for royalty they just say a fixed amount. How to know that this has already been inflation adjusted or examiner has just mentioned a specific amount?
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MJ23 Q3 Blackbosca Co Royalty payment
2y ago#1Because the question says that the first years payment is fixed (and only inflates in later years).
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