Is anyone else having trouble with the Calculation of Real and Nominal inputs to FCF in Reading number 38?
Anyone have any quick short cuts to not getting confused in this?
Sorry to piggback on your thread, but i have another related question.
Why do we account for inflation in both the nominal cash flows and nominal discount rate, but we only account for country specific risks in either the cash flows or the discount rate, but not both ?? Especially when one of the listed emerging market risks is inflation.
And, I know the math is right, but it seems odd when you adjust the real WACC to a nominal WACC, and the resulting Nom WACC is 50%+ in some cases. I’ve never seen a WACC remotely close to that, not even VC rates.
I added notes on my site from last year preparation. Go through nine easy steps , then you get the big picture.
Probably do couple of examples. it is not that complex as it appears.
SMEKA23, this was really helpful, it helped me to understand how to solve problems that even after going through the text and other notes several times I was having a hard time with. Thank you!