A Firm Is Considering a Project That Has Cash Flows

question 10

Multiple Choice

A firm is considering a project that has cash flows indexed to the consumer price index.What discount rate should be used?

• A)Nominal discount rate
• B)Yield to maturity
• C)Change in consumer price index
• D)A rate that uses the consumer price index in its measure

---

Definitions:

Flexes

Refers to the action of bending a limb or joint.

Rotates

To move or turn around a central point or axis.

Below The Elbow

Referring to the part of the arm or to treatments and prosthetics that are applied to the forearm and hand, distal to the elbow joint.

Abbreviation

A slimmed-down version of a word or phrase.