When prices change: consistency in the financial analysis of projects

摘要

There are problems in practice with dealing with inflation and exchange rate changes in the financial analysis of projects. This paper reviews existing procedures for dealing with changing prices, identifies problem areas and explains how they can be dealt with. The approach is manageable in its complexity, comprehensive in its coverage and consistent in so far as possible with both economic and accounting disciplines. It is illustrated with an example of a productive sector project with a ten-year life.