Can someone help me with a cashflow and inflation question?

Question

Basically I have information on an organization's operating cash and investment activities over the past 5 years (2002-06). I need to compare these streams and understand I will have to bring all the flows to the $2006 in order to compare. What rate should I use to bring previous flows to $2006, should I refer to the CPI index? Thanks for your help on this..

Answer 1

Why would you use the consumer price index if it is a business? You should be using the PPI or producer price index if it allows you to so. If not then I guess use CPI, but the correct way in the real world wouls be to use the PPI.