Topic: Inflation rates and NPV Subscribe | Previous | Next
Ellie Hammett 4/7/2025
Hi all!
Please can you help - I am trying to understand how LEAP applies its inflation rate on costs. If I am putting in some capital costs for a power plant, for example, is it better to input the data with the inflation rate included, i.e. with increasing costs over time, or to leave as a constant cost across all years and LEAP will apply the inflation rate for me?
I just want to make sure I am not double counting!
Thanks,
Ellie
Charlie Heaps 4/12/2025
All costs are entered into LEAP as real/constant costs - (i.e. ignoring/subtracting out inflation). You can tell LEAP what year is used as the basis for your costs in the Settings screen. Results are also normally shown either as constant costs or as discounted costs. The cost/benefit summary report shows Net Present Values: i.e. cumulative discounted costs. You can also apply a single inflation rate to show cost results in nominal dollars in various results reports.