inflation -adjustment

CFAI exam 2007- Q 1: I did not put in 200,000 for expenses in the calculation. Also, did not add inflation-because it specifically says that theri inflation adjsuted expenses will remain constant.

what is your question then?

My Q is that how is this calculation different -pretax return vs. regular post tax return calc. It seems to be the same. Can you point out the difference & how to do them?

derswap07 Wrote: ------------------------------------------------------- > CFAI exam 2007- Q 1: > > I did not put in 200,000 for expenses in the > calculation. See my answer to this in another thread http://www.analystforum.com/phorums/read.php?13,1126971,1127074#msg-1127074 Also, did not add inflation-because > it specifically says that theri inflation adjsuted > expenses will remain constant. There are two kinds of increases over time. - Increases in REAL spending, i.e., you go from eating McDonald to eating at a three-star Micheline restaurant. - Increases in NOMINAL spending due to inflation, i.e., you still eat at McDonald but cost of a BigM increases from year to year. Here, it just means that the REAL expense remains the same for all years, i.e., only the second change.

> > See my answer to this in another thread > http://www.analystforum.com/phorums/read.php?13,11 > 26971,1127074#msg-1127074 > Wrong thread. Read this instead http://www.analystforum.com/phorums/read.php?13,1126502,1126885#msg-1126885