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P4 Dec 2018 Question1(a), very short, how do the project operating cash flows (real) transfer to nominal ones?

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P4 Dec 2018 Question1(a), very short, how do the project operating cash flows (real) transfer to nominal ones?

P4 Dec 2008 Question1(a), very short, how do the project operating cash flows (real) transfer to nominal ones? i can't find the factor used. anyone help me? thanks.
Project operating cash flow (real) 52,000 490,000 2,242,000 928,000 928,000
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Project operating cash flow (nominal) 54,633 527,676 2,474,749 1,049,947 1,076,195

May 22nd 2014 AN ACCA USER 420 Points

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Projected operating cash flow (REAL) (1+r) = 52,000 490,000 2,242,000 928,000 928,000 ( the calculation is in Pound)
Given inflation in UK (h) = 2.5% per annum (Projected by the bank of England)
For nominal value calculation: Provided in Formulae Sheet - The Fisher formula is (1+i)=(1+r)(1+h) where i is nominal rate, r is real rate, and h is inflation,
Projected operating cash flow (nominal) (1+i) = 52,000(1+0.025)(1+0.025) = inflation is projected to 2010 i.e. two years ahead.
= 49,000(1+0.025)(1+0.025)*(1+0.025) =inflation is projected to 2011 i.e. three years ahead and so on.............

Hope it will help.

May 26th 2014 AN ACCA USER 8,730 Points
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