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Why is it important to adjust project cash flows for inflation effects?

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Why is it important to adjust project cash flows for inflation effects?

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  1. It is important as to make the figures comparable.

    As the saying goes, a dollar today is better than a dollar tomorrow. Reason being that inflation will erode the purchasing power of cash, hence it is important to adjust project cash flows to present value in order to compare the profitability of the projects :)

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