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Dear Sir,
In NPV calculation sometimes the sales/costs figures include inflation for 1 -st year but sometimes you have to just copy the figures for 1-st year and have to start the inflation from second year. If you miss this point than all figures becoming wrong.
Is there any hint how to guess about 1-st year inflation?Thank you!
I explain this is detail in my free lectures on relevant costs for investment appraisal!!
It depends on the wording of the question. If the flows are given at current prices then they inflate in the first year. If, on the other hand, you are told the flows in the first year, then they only inflate in later years.
I do suggest that you watch the lectures – they are a complete free course for Paper F9 and cover everything needed to be able to pass the exam well.
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