Dear Sir
In the case of a question of real and nominal, what figure do we divide the after tax cost of capital by if they give us separate inflation figures for sales and costs and ask us to do the real terms NPV???
Regards
Richard
Ask the Tutor ACCA FM
Real and nominal
8y ago#1It would mean discounting each set of inflating flows separately, calculating a real cost of capital for each inflating flow separately.
That would be ridiculous which is why, as I replied to you before, virtually always we discount the nominal flows at the nominal cost of capital.
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