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WACC and NPV Changes Due to Inflation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › WACC and NPV Changes Due to Inflation

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  • August 26, 2021 at 2:54 am #632948
    alphabetawacc
    Member
    • Topics: 3
    • Replies: 0
    • ☆

    Hi everyone, can someone kindly help me with this problem?
    Explain what would happen to the WACC and the NPV of a firm’s project if the country where the firm is based’s inflation rate were to unexpectedly increase. Why would these things happen?

    August 26, 2021 at 7:54 am #632985
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54833
    • ☆☆☆☆☆

    You have asked this in the Ask the Tutor Forum and therefore ‘everyone’ is me 🙂

    Neither the WACC nor NPV are examinable in Paper FA. Paper FA is Financial Accounting which is nothing to do with discounted cash flow.

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