The Likely Effect of Discounting Nominal Cash Flows with Real

question 67

Multiple Choice

The likely effect of discounting nominal cash flows with real interest rates will be to:

• A) make an investment's NPV appear more attractive.
• B) make an investment's NPV appear less attractive.
• C) correctly calculate an investment's NPV if inflation is expected.
• D) correctly calculate an investment's NPV, regardless of expected inflation.

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Definitions:

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