If the Discount Rate Is Stated in Real Terms, Then

question 66

Multiple Choice

If the discount rate is stated in real terms, then in order to calculate the NPV in a consistent manner, the project requires that

• A)cash flows be estimated in nominal terms.
• B)cash flows be estimated in real terms.
• C)accounting income be used.
• D)cash flows be estimated including future inflation.

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Definitions:

Criterion Contamination

In performance appraisal or research, when factors unrelated to the construct being measured affect the scores.

Correlations

Statistical measurements that describe the extent to which two variables move in relation to each other.

Performance Standards

Established benchmarks or criteria against which the execution or quality of work tasks and outputs are measured.

Reliability

The consistency of a test, assessment, or measurement tool to produce the same results under the same conditions over time.