valuation with inflation

Valuation with Inf Consider the cash flow below. Compute the following: 1. Inflation Adjusted Cash Flow 2. Discounted Cash Flow After Inflation Adjustment 3. Inflation Adjusted Net Present Value 4. Market Rate 5. Inflation Adjusted Net Present Value using the Market Rate 6. Should this Project be pursued after adjustment for inflation? 7. Should this Project be pursued if inflation is disregarded? Inflation Rate: 4.00% Annual f Discount Rate: 10.00% Annual i Year 0 1 2 Cash Flow ($50,000) ($60,000) ### Inflation Adjusted Year 0 1 2 Cash Flow ($50,000) ($60,000) ### 1. Inflation Adjusted Cash Flow ($50,000) ($57,692) ($92,456) Inflation Adjusted Inflation Adjusted Cash Flow ($50,000) ($57,692) ($92,456) Inflation Adjusted Discounted Cash Flow ($50,000) ($52,448) ($76,410) 3. Inflation Adjusted Present Value ($6,361) 4. Market Rate: 14.40% m = i + f + i * f Cash Flow ($50,000) ($60,000) ### 5. Inflation Adjusted Present Value ($6,361) 6. This project has a negative Present Value after in

Upload: majorkonig

Post on 19-Nov-2015

213 views

Category:

Documents

0 download

Report

Download

Embed Size (px):

DESCRIPTION

valuation with Inflation.

TRANSCRIPT

ValuationValuation with InflationConsider the cash flow below. Compute the following:1. Inflation Adjusted Cash Flow2. Discounted Cash Flow After Inflation Adjustment3. Inflation Adjusted Net Present Value4. Market Rate5. Inflation Adjusted Net Present Value using the Market Rate6. Should this Project be pursued after adjustment for inflation?7. Should this Project be pursued if inflation is disregarded?Inflation Rate:4.00%AnnualfDiscount Rate:10.00%AnnualiYear0123456Cash Flow($50,000)($60,000)($100,000)$30,000$40,000$100,000$175,000Inflation Adjusted Cash FlowYear0123456Cash Flow($50,000)($60,000)($100,000)$30,000$40,000$100,000$175,0001. Inflation Adjusted Cash Flow($50,000)($57,692)($92,456)$26,670$34,192$82,193$138,305Inflation Adjusted Discounted Cash FlowInflation Adjusted Cash Flow($50,000)($57,692)($92,456)$26,670$34,192$82,193$138,3052. Inflation Adjusted Discounted Cash Flow($50,000)($52,448)($76,410)$20,037$23,354$51,035$78,0703. Inflation Adjusted Present Value($6,361)4. Market Rate:14.40%m = i + f + i * fCash Flow($50,000)($60,000)($100,000)$30,000$40,000$100,000$175,0005. Inflation Adjusted Present Value($6,361)6. This project has a negative Present Value after inflation, so do not pursue.7. Net Present value without inflation$23,545The Project should be pursued if inflation is not considered.

Inflation - RBA · 2020-02-10 · Inflation The March quarter inflation data were in line with the forecasts in the February Statement. Measures of underlying inflation were steady

Get Mortgage and Property Valuation with Valuation QLD

Workshop “Monetary Policy and Inflation Targeting...inflation, which goes in line with economic theory.16 The degree of pass-through from past inflation to today's inflation, however,

90421 Valuation with the CMA

MODELLING INFLATION UNCERTAINTY IN TRANSITION … · MODELLING INFLATION UNCERTAINTY IN TRANSITION ECONOMIES: ... for countries with moderate inflation. This ongoing debate gained

Inflation, relative prices and nominal rigidities · Inflation, relative prices and nominal rigidities1 ... inflation rate. This conclusion contrasts sharply with the implications

INVESTMENT VALUATION MANUAL · valuation of convertible debentures 15 6. valuation of securities with put/call option 16 7. valuation of npas 16 8. valuation of reverse repo (purchase

Money and Business Cycles · concern with business cycles than with concern about inflation. Easy money policies were accompanied by inflation; and inflation was no- where stemmed

Decent Growth With Demanding Valuation

Inflation and Income Inequality in Developed Economies...inflation and income inequality. Low inflation rates are associated with higher income inequality. As inflation goes up, inequality

Survey Measures of Expected Inflation and the Inflation ... · inflation data but are still relying heavily on core inflation data. This is consistent with the position advocated

Inflation Dynamics with Bounded Rationality