The NPV Value Obtained by Discounting Nominal Cash Flows Using

question 51

Multiple Choice

The NPV value obtained by discounting nominal cash flows using the nominal discount rate is the same as the NPV value obtained by discounting:
I.real cash flows using the real discount rate;
II.real cash flows using the nominal discount rate;
III.nominal cash flows using the real discount rate

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

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Definitions:

Accounts Payable

Money owed by a company to its creditors for goods or services that have been delivered or used, but not yet paid for.

Inventory

The total amount of goods and materials held by a company that are ready for sale or in the process of being produced.

Common Stock

A type of equity security that represents ownership in a corporation, giving holders voting rights and a share of the profits.

Cash Dividends

Cash distributions from a company's earnings to its shareholders as a reward.