Skip to content

Ask the Tutor ACCA FM

Nominal NPV and real NPV

Former userFormer user6y ago

[Content removed at user request]

John MoffatJohn MoffatTutor6y ago#1
The answer does not show two approaches to calculating the nominal NPV. The first part of the answer calculates the nominal/actual cash flows and discounts at the nominal/actual cost of capital. (And after are the workings for getting the nominal cash flows). The second part of the answer calculates the real cash flows, by taking the nominal flows and removing the general rate of inflation of 3.7%. It then discounts the real cash flows at the real cost of capital of 8%.
John MoffatJohn MoffatTutor6y ago#2
Yes.
Cchristina4y ago#3
how is it calculated,,like a question which has sales, selling price, variable cost, fixed costs and inflation. can u explain in detail involving an example will be much appreciated
John MoffatJohn MoffatTutor4y ago#4
It is calculated exactly as I explained in my previous reply. Have you watched my lectures on investment appraisal with inflation?
Sign into reply to this topic.