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Hi, under the sample answer working 2, I understand that the 2,436 is calculated by 2,400 x 101.5% after taking into account the Japanese annual inflation rate of 1.5%. How about the subsequent 2,576 and 314?
Thank you.
The revenue ignoring inflation at time 3 is 2,500 (from the question).
With 2 years inflation at 1.5%, the cash inflow will be 2,500 x 1.015^2 = 2,576The revenue ignoring inflation at time 4 is 300 (from the question).
With 3 years inflation at 1.5%, the cash inflow will be 300 x 1.015^3 = 314.
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