The Nominal Method Is Preferred to the Real Method for NPV

question 75

Multiple Choice

The nominal method is preferred to the real method for NPV analysis because:
I. Cash flows can be inflated at different rates
II. It includes a risk premium
III. It includes the risk-free rate

• A) I only
• B) I and II only
• C) II only
• D) II and III only

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Definitions:

Organizational Unit

Represents a subdivision within an organization designed to carry out specific functions or responsibilities.

Specialized Activities

Tasks or projects that require specific skills or knowledge, distinct from general or routine operations.

Need For Power

A psychological drive that represents the desire to control or influence others.

Power Politics

A political strategy focusing on gaining and maintaining power within an organization or among nations, often through direct, assertive tactics.