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Hi there, could you remind me what is meant by incremental inflation rates mentioned in the latest report? (Q1, part b comment)
He could actual mean several things, but without seeing the question (because it has not been published) it is impossible to be certain.
What he is probably referring to is this:
Suppose a flow has a current price of 100 per year.
Suppose inflation is 5% in the first year and 6% in the second year.Then the actual cash flow at time 1 will be 100 x 1.05 = 105
The actual cash flow at time 2 will be 100 x 1.05 x 1.06 = 111.3
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