In the exaplanation of question 3, I get how they are calculating the real growth rate and real required rate of return, but why have they used nominal value for FCFE in the real formula? Am I missing something here?
i asked this same question a couple of days ago but got no answer. anybody?
perhaps those figures aren’t nominal values but real?
Now my understanding is that if accounting statement is given in a question, I would assume that they are nominal values as they have inflation component is them. If I want to calculate real values I have to adjust values with inflation index. Can you guys please validate if my understanding is correct?