Inflation and the Capital Budgeting Process
Cash flow analysis under conditions of inflation is discussed by addressing the analysis and application of general and real price changes in forestry investment decisions. Terms required for understanding and undertaking such analyses are defined. Cash flow analyses can be conducted using the current or constant dollar approaches and on before- or after-tax bases. Inflation should be accounted for in analyses conducted on an after-tax basis which include depreciation expenses or depletion allowances. Tables of formulae are presented that modify the traditional, well-known valuation formulas by incorporating general and real price changes.
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Document Type: Journal Article
Affiliations: Assistant Professor of Forestry, School of Forestry and Wildlife Management, Louisiana State University, Baton Rouge
Publication date: 01 November 1982