Which of the Following NPV Analysis Methods Requires Adjustment of a Project's

question 13

Multiple Choice

Which of the following NPV analysis methods requires adjustment of a project's terminal value for inflation?
$\begin{array}{llcc}\underline{\text { Real }}&\underline{\text { Nominal }}\end{array}$

a. $\begin{array}{llcc}\text { Yes }&\quad\text {Yes }\end{array}$

b. $\begin{array}{llcc}\text { No }&\quad\text {No }\end{array}$

c. $\begin{array}{llcc}\text { Yes }&\quad\text {No }\end{array}$

d. $\begin{array}{llcc}\text { No }&\quad\text {Yes }\end{array}$

• A) No/Yes
• B) Yes/No.
• C) No/No
• D) Yes/No

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Definitions:

Static Budget

A fixed budget that does not change or adjust to variations in business activity levels, often used for control purposes in stable environment operations.

Flexible Budget

A budget that adjusts or flexes with changes in the volume or activity level.

Direct Labor

The wages or salaries paid to employees who are directly involved in producing goods or providing services.

Electric Power

Electric power is the rate at which electrical energy is transferred by an electric circuit, commonly utilized for domestic, commercial, and industrial activities.