Apply a 3% per year general inflation rate where applicable for allrelevant costs other than electricity. Assume that the cash flow for an item occurs in theperiod incurred. The tax rate is 30%. The hurdle rate (or 'discount rate') for this type ofproject is 8.0% - this is a nominal (as opposed to real) rate, and so apply inflation impactsyear-on-year in the modeling.

For this information, i am not quite sure when i calculate the NPV. Will the discount increase every year (such as year 1 is 8 %, year 2 is 8.24%, year 3 is 8.49% and son) or i just use 8% for the whole project. the project life is 10 years.

Thank you very much