NPV – Inflating Fixed Costs

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December 8, 2016 at 2:37 pm #362236
unied_26
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Hi Tutor,

In an NPV question, with Inflation…

Please advise in what circumstances do I NOT inflate Fixed Costs…?

Many thanks,
Michael
December 8, 2016 at 3:44 pm #362286
John Moffat
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Fixed costs are only relevant if they are incremental fixed costs.

Whether or not you inflate them depends on whether the question says that they inflate or not!
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