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:

Kickoff Meetings

Initial meetings that mark the start of a project, where objectives, roles, and protocols are usually established.

Project Office

A centralized department that oversees and improves the management of projects within an organization, ensuring consistency and efficiency.

Policies And Procedures

Formalized rules and guidelines within an organization that outline operations, decision-making processes, and appropriate behavior for employees.

Start-Up Phase

The initial stage in a project or business venture where plans are made, resources are gathered, and activities begin to launch the project or business.