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Deflating Cashflows

Consider the example described in the section The Compute Menu. To create the cashflow to deflate, follow these steps:

  1. Select Investment New Generic Cashflow to open a new generic cashflow.

  2. Enter CD_DEFLATED for Name.

  3. Load WORK.CD_POUNDS into its Cashflow Specification (see Figure 48.6).

  4. Click OK to return to the Investment Analysis dialog box.

Figure 48.6 The CD before Deflation
The CD before Deflation

To deflate the values, follow these steps:

  1. Select CD_DEFLATED from the portfolio.

  2. Select Compute Constant Dollars from the menu. This opens the Constant Dollar Calculation dialog box.

  3. Clear the Variable Inflation List area.

  4. Enter 3 for the Constant Inflation Rate.

  5. Click Create Constant Dollar Equivalent to generate a constant dollar equivalent summary (see Figure 48.7).

Figure 48.7 CD Values after Deflation
CD Values after Deflation

You can save the deflated cashflow to a SAS data set for use in an internal rate of return analysis or breakeven analysis.

Click Return to return to the Investment Analysis dialog box.

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