Quote:
Originally Posted by Jay Random
The trouble with increasing profit at the rate of inflation is that you then need to discount the future value of the asset at the same rate. If you wind up with an asset whose value goes up if measured in nominal dollars but down in constant dollars, that isn't really a profit – though it will certainly be taxed as if it were, which makes the deal even worse.
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doesnt applying the discount rate to the cash flow when you sell the asset at the end account for the inflation on the franchise value?