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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › regarding perpituity
sir the kaplan book has perpituity with growth how is that different from inflation. mathematically?
When there is growth we either discount at the real cost of capital (as opposed to the nominal/actual cost of capital) or we can use the dividend valuation formula (which is effectively doing the same thing – it deals with any growing perpetuity (not just dividend streams).
I illustrate both approaches in my free lectures.