UNIT -2

Presented by:-
Deepika pal
MBA 3rdsem
 Inflation and capital budgeting

 Inflation is the increase in the

general level of periods for all goods
and services in an economy.

 Inflation is an important fact of

economic life and must be
considered in capital budgeting
 Its depend on nominal value v/s real
value
 Nominal value are the actual amount of
money making up cash flow

 Real valued reflect the purchasing

power of the cash flow
Inflation effect two aspect of capital
budgeting
 If projected cash flows are in real terms (without
inflation considered) the discount rate used should