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Hello Mr. John
In Tramont Co, while calculating the variable costs, why the variable cost in year 1 is not inflated?
Query solved as they clearly mentioned in the question that the following revenues and costs apply to the first year of operation. Hence we have not inflated cash flows pertaining to year 1.
But another question I am having here is in the NPV calculation. Once the cash flows are converted into USD we are directly calculating the NPV of the cash flows in USD but after converting the cash flows in USD why aren’t we considering the excess taxes in USD?
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