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:

Allowance for Doubtful Accounts

This is an accounting method that estimates the amount of receivables that may not be collected due to customer defaults.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's normal operating cycle.

Merchandise Inventory

Merchandise on hand (not sold) at the end of an accounting period.

Notes Receivable

Written promises for amounts to be received in the future, typically with interest, classified as assets on a balance sheet.