Which One of These Is a Requirement When Computing the Net

question 61

Multiple Choice

Which one of these is a requirement when computing the net present value of a capital project?

• A)The discount rate used must be a nominal rate.
• B)The discount rate must be stated in real terms.
• C)Nominal cash flows must be discounted using a real rate.
• D)Real cash flows must be converted to nominal cash flows.
• E)Real cash flows must be discounted using a real rate.

---

Definitions:

Impulse Control

The ability to resist or delay an impulse, drive, or temptation to act and is related to self-regulation.

Anxious Cluster

A group of personality disorders characterized by high levels of anxiety and fearfulness; includes avoidant, dependent, and obsessive-compulsive personality disorders.

Obsessive-Compulsive

Referring to a disorder characterized by unwanted, persistent thoughts (obsessions) and repetitive behaviors (compulsions) that an individual feels the urge to perform.

Avoidant

Characterized by a pattern of social inhibition, feelings of inadequacy, and a hypersensitivity to negative evaluation.