Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Nominal NPV and real NPV
- This topic has 5 replies, 3 voices, and was last updated 2 years ago by John Moffat.
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- August 4, 2020 at 4:32 pm #579223
Dear sir, please help me to explain about the question 160 of revision kit. Part A require to calculate nominal NPV and real NPV.And I understand that 2 value will be different.But the answer shows it has the same value.I understand that the answer show 2 approach to calculate nominal NPV, and not address the requirements.Do you think so?
August 4, 2020 at 5:21 pm #579251The 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%.
August 5, 2020 at 1:16 am #579277And will 2 result will be always same ?
August 5, 2020 at 8:28 am #579299Yes.
June 1, 2022 at 10:53 pm #657098how 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
June 2, 2022 at 8:53 am #657115It is calculated exactly as I explained in my previous reply.
Have you watched my lectures on investment appraisal with inflation?
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