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Hey members,
I will be very grateful if some one could help explain to me the meaning of using nominal term approach in the calculation of npv of an investment..Ref:Dec 2009 question 1b.
please help.
Thanks to all.
pastorgoldHi there,
recall fishers formula:
there are two rates: real rate, one which does not include the effet of inflation
and the other one is money/nominal rate: one that does include inflationSo nominal cashflows are cashflows that are discounted at a nominal discount rate..
I hope I’ve cleared your doubt..
be good.
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