top of page
  • Writer's pictureThomas Tsang

Nominal amount in valuation

Nominal amount means amount without taking into account of inflation in forecast. Then, in discount rate also not add the inflation rate.


Then will be consistent in both forecast and discount.


If we consider real cash flow, then the inflation is add in. Say 7% inflation rate, the discount rate should add 7% to reflect it. The result of NPV will be the same in both nominal value and real value.




6 views0 comments

Recent Posts

See All

Impairment test under US GAAP

Under US GAAP, the carrying amount of the assets is compared to the undiscounted future cash flow of the assets generated. If the amount of undiscounted cash flow is highr than carrying amount, no im

Discount on enterprise value

When apply discount on lack of marketability (DLOM) and lack of control (DLOC) on enterprise value (EV), it is a multiple of EV x (1-DLOM) x (1-DLOC). But apply the discount on Equity value would lowe

Equity instrument

In accordance with SFRS109, investment in equity instruments must be subsequently measured at fair value. In limited circumstances, cost represents the best estimate when recent information not avail

bottom of page