高級投資項目管理的經濟效益評價(英文版)(ppt 75頁)

高級投資項目管理的經濟效益評價(英文版)內容提要：
Capital Budgeting with Inflation
1. Inflation Effect on Cost of Capital
Inflation must considered in capital budgeting since investors will incorporated expectation about inflation into their required rate of return. In fact, Nominal Rate of Return, which we usually see, consists of real rate of return and inflation rate.
Nominal Rate of Return (Kn) is a real rate of return (K) plus inflation rate (f), but we can not simply add these two components together, nominal rate of return is lager than a result from an addition of K and i. More precisely,
(1+Kn ) = (1+K)(1+f)
Kn = K+f+K?f
2. Capital Budgeting by NPV under Inflation
Solution：
To make project A and project B comparable, it is reasonable to assume that project A and project Bcan be replicated at a constant scale. Thus, project A should be superior to project B because it recovers cash flows faster.
How? In order to compare projects with unequal lives, we need to assume that the projects can be replicated at constant scale and compute the NPV of infinite stream of constant replications. By doing so, we finally have the following formula to compute NPV for project A and project B, assuming that both A and B are replicated at constant scale forever.

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