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Can TVM be used to evaluate the real return or just the nominal return?
Wiki User
∙ 13y ago
TVM, or Time Value of Money can certainly be used to calculate a real return. The only difference between a nominal return and a real return is inflation, so simply discount your future cash flows by anticipated inflation and you have a real return.
In simpler terms assuming inflation is steady you could simply deduct inflation from your nominal return. For example a nominal 7% return with 3% inflation could be desribed as a 4% real return.
Wiki User
∙ 13y ago
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Are there any circumstances under which an investor might be more concerned about the nominal return on an investment than the real return?
circumstances: a. when investors calculate the tax on returns, they use nominal returns,because tax on nominal returns is less than real returns in order to adjust profits.
What is the difference nominal cash flow and real cash flow?
Difference between real and nominal cash flow is that nominal cash flows uses the inflation information as well for calculation of nominal cash flow of future while real cash flow don't use that information for calculation.
What is nominal interest?
Nominal InterestA nominal interest rate is the interest rate that does not compensate for inflation. This is used in relation to "effective interest rate" or "real interest rate."" Real Interest Rate = Nominal Interest Rate - Inflation Rate " Improvement suggested by Palash Bagchi.
The GDP gap measures the difference between?
nominal GDP and real GDP.
What does the nominal GDP divided by a price index multiplied by 100 equal?
Real GDP
Are there any circumstances under which an investor might be more concerned about the nominal return on an investment than the real return?
circumstances: a. when investors calculate the tax on returns, they use nominal returns,because tax on nominal returns is less than real returns in order to adjust profits.
How can you have a negative real rate of return over the same period?
If the rate of inflation exceeds the nominal rate of return during the period in question, then the real rate of return can be negative.
What is nominal price and real price?
Real price is in a mud nominal price is in your FACE
How do you calculate nominal GDP at market price?
Nominal GDP is GDP evaluated at current market prices. Therefore , nominal GDP wil include of the changes in market prices that have occurred during the current year due to inflation or deflation. Nominal GDP= GDP deflator.real GDP/100 Real GDP is GDP evaluate at the market price of some base year. GDP deflator --- Using the statistics on real GDP and nominal GDP, one can calculate an implecit index of the price level for the year. This index is called GDP deflator. GDP deflator = nominal GDP/real GDP .100 The GDP deflator can be viewed as a conversion factor that transform real GDP into nominal GDP. Note that in the base year, real GDP is by definition equal to nominal GDP so that the GDP deflator in the base year equal to 100.
Liabilities is real accounts or nominal accounts?
nominal account.
Is depreciation real or nominal account?
It is a real contra account. The nominal account associated with depreciation is depreciation expense.
Is accumulated depreciation real or nominal account?
It is a real contra account. The nominal account associated with depreciation is depreciation expense.
Is inventory a nominal account?
real
What is difference nominal cash flow and real cash flow?
Assuming we're using the cash-flows (Cf) and the required return rate (r) to calculate the Net Present Value (NPV), We need to follow the Rule of Consistency, which is to say, if our (r) is stated in real terms, we must use Real (Cf), and vice versa. Helpful formulas: To adjust Real (Cf) to Nominal, we compound it (n) periods, using the rate of inflation (inf), viz: (Cf-real) * (1+inf)^(n) Similarly, to adjust Nominal (Cf) to Real, we discount it viz: (Cf-nominal) / (1+inf)^(n) The Fisher Theorem illustrates the relation between real and nominal rates, viz: (1+r-nom) = (1+r-real) * (1+inf)
Is suspense account a nominal account?
Not necessarily. It can be of any type. Real, Personal or Nominal.
Is Sales Account nominal or real account?
real accounts
What is the difference nominal cash flow and real cash flow?
Difference between real and nominal cash flow is that nominal cash flows uses the inflation information as well for calculation of nominal cash flow of future while real cash flow don't use that information for calculation.
