Do we need to adjust for inflation before discounting, when calculating NPV?
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11y ago#1Yes.
We discount the actual (nominal) cash flows at the actual cost of capital.
Arriving at the actual cash flows involves adding inflation.
This is however not very likely at all at F2, it is at F9 where it becomes an important issue.
Thank you Sir :-)
11y ago#3You are welcome, Saahath :-)
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