Page reference: Section 3.3 Chapter 15 I could not understand the adjustment to ILF if we expect losses to have increased uniformly by a% between time t and t’. The course notes says that the new ILF at time t’ for the same limit x will be equal to the ILF at time t for the limit (x/(1+a)). Now, since ILF is positively related to the limit, this equation says that the impact of inflation will be to reduce the ILF for the same limit at current time as compared to in the past. But, this does not make sense. I tried to apply this by assuming 10% inflation to the example given on page 21 of the same chapter. After applying inflation, the numerator increased by 210 and denominator by 60, resulting in new ILF to increase to 1.6203 as opposed to 1.5769 previously without inflation.
Hi Kunjesh Please be patient! I'm sure other students are just as busy as you, and tutors cannot always respond immediately when we are in the middle of the busy tutorial period. Anyway, I think you'll find you're looking at 2019 materials. See the CMP Upgrade on our website. Hope that helps Ian
Hi Ian, Thanks for your reply. I was not sure if the question was framed correctly, did not want to receive no replies just because I was not able to convey my query correctly. However, I am using the 2019 examination material only.
