Which Approach Should Be Taken to Adjust for Inflation When

question 20

Multiple Choice

Which approach should be taken to adjust for inflation when calculating net present value?

• A) Estimate the future cash flows by multiplying by the specific inflation of each cash inflow and outflow item, and then discount using the real rate of return
• B) Estimate the cash flows in money terms and use a real discount rate
• C) Estimate the cash flows in real terms and use a real discount rate
• D) Estimate the cash flows in real terms and use a money discount rate

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Definitions:

Lifetime Risk

The probability that an individual, over the course of a lifetime, will develop or die from a specific disease.

Identical Twin

One of a pair of twins who originate from a single fertilized egg, resulting in genetically identical individuals.

GABA

Gamma-Aminobutyric Acid, a key inhibitory neurotransmitter in the brain that helps regulate neuronal excitability and plays a role in reducing anxiety and promoting relaxation.

Psychological Disorder

A condition characterized by significant disturbance in an individual's cognition, emotion regulation, or behavior, typically associated with distress or impairment in functioning.