Since the profitability of projects is affected by tax incentives such as tax holidays, dynamic investment criteria have to be based on net cash flow after tax. For countries facing inflation, often an appraisal with real or constant prices is suggested to avoid prediction of inflation rates and to show inflation adjusted profitability. It is shown that this is not of relevance for an investment appraisal. Furthermore, inflation rates have to be forecasted in any case, because in line with most tax laws in the world, depreciation and debt service have to enter the calculation in real terms too.
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