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The inflation affects the investment indirectly when read with the return. Example if an investment provides a return of 6%, and the inflation during the same period is 5%, the investment in real terms increases only by 1% and not by 6%, as inflation eats away returns to the tune of 5%.
Wiki User
∙ 11y ago
Wiki User
∙ 15y agohow inflation affects investment
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How will inflation affect hospitality industry in Nigeria?
how does inflation affect hospitality in nigeria industry
How do interest rates and inflation affect real estate in south Africa?
explain how do intrest rates and inflation affect the real estate
What do you think happens to the value of investments that grow slower than inflation?
If an investment grows slower than inflation, its real value decreases.
Is it good to have a high inflation rate or low?
Low inflation is considered good because it represents price stability, which encourages productive planning and investment.
What is the Impact of inflation in return on investment?
Calculating the return on investment you actually want to know whether the investment will give you positive value in the end. You wouldn't want to waste your money, right? Thus you want to make sure that the net present value of your investment is positive. However, inflation deteriorates the value of money. 100 money today most likely can buy you more today than in a year's time. That's why you are interested in adjusting the expected future cashflows to the expected inflation rate. Overall, not accounting for inflation will overestimate the value of investment. In other words, you could choose something which will not bring you benefit.
How will weather affect the inflation of giant balloons?
how will the weather affect the inflation of the ballooons
How will inflation affect hospitality industry in Nigeria?
how does inflation affect hospitality in nigeria industry
How is ROI or return on investment calculated?
Return on investment is calculated by subtracting investment capital from the return, taking into account inflation, taxation and the time frame involved.
How do interest rates and inflation affect real estate in south Africa?
explain how do intrest rates and inflation affect the real estate
What do you think happens to the value of investments that grow slower than inflation?
If an investment grows slower than inflation, its real value decreases.
How will the weather affect the inflating of the balloons?
how will the weather affect the inflation of the ballooons
Is it good to have a high inflation rate or low?
Low inflation is considered good because it represents price stability, which encourages productive planning and investment.
Matthew made an investment with an 8 annual yield. However the real growth rate of his investment was only 5. What was the inflation rate?
It was 2.86%.
Was the ATM the answer to inflation?
No. The ATM does not in any way affect or answer inflation. It is just a machine through with customers can do banking transactions without visiting their bank. It does not cause or affect inflation. Only the country's central bank can control inflation by changing regulatory policies.
What is the Impact of inflation in return on investment?
Calculating the return on investment you actually want to know whether the investment will give you positive value in the end. You wouldn't want to waste your money, right? Thus you want to make sure that the net present value of your investment is positive. However, inflation deteriorates the value of money. 100 money today most likely can buy you more today than in a year's time. That's why you are interested in adjusting the expected future cashflows to the expected inflation rate. Overall, not accounting for inflation will overestimate the value of investment. In other words, you could choose something which will not bring you benefit.
What factors affect the rate of return of an investment at maturity?
What factors affect the rate of return of an investment at maturity?
How do chemicals affect the inflation of a balloon?
Inflation of a balloon is NOT a chemical reaction, so there are no chemicals involved in 'affecting' it.
