Get inflation factor

This function calculates the inflation factor based on inflation rate.

Usage

get_inflation_factor(n_years, inflation_rate = NULL)

Arguments

n_years: Numeric value referring to number of years in the future to be considered in the discounting and/or inflation. Be aware that the year 0 (without discounting/inflation, i.e. the present) is not be counted here. If a vector is entered in the argument impact, n_years does not need to be entered (length of impact = n_years + 1).
inflation_rate: Numeric value between 0 and 1 referring to the annual inflation (increase of prices). Only to be entered if nominal (not real) discount rate is entered in the function. Default value = NULL (assuming no nominal discount rate).

Value

This function returns the numeric inflation factor.

Details

Methodology

This function is called inside monetize().

It calculates the inflation factor based on the inflation rate and the number of years into the future as described in Brealey et al. (2023) .

Detailed information about the methodology (including equations) is available in the package vignette. More specifically, see chapters:

Monetization

References

Brealey RA, Myers SC, Allen F, Benninga S, Read J (2023). Principles of Corporate Finance, 14th edition. McGraw-Hill Education, New York, NY. ISBN 978-1264117464.

Author

Alberto Castro & Axel Luyten

Examples

get_inflation_factor(
  inflation_rate = 0.02,
  n_years = 5
)
#> [1] 1.104081