In question 1A it asks for nominal after-tax required return for the coming year.
You gross up last year’s expenses for inflation reflecting this year’s expenses, but then you add inflation again to the required return which you’ve calculated. Why do you need to account for inflation twice in one year? Should you always apply inflation to the expenses and the return required?
You gross up last year’s expenses for inflation reflecting this year’s expenses, but then you add inflation again to the required return which you’ve calculated. Why do you need to account for inflation twice in one year? Should you always apply inflation to the expenses and the return required?