Proper Treatment of Inflation in NPV Calculations Involves

question 54

Multiple Choice

Proper treatment of inflation in NPV calculations involves

• A)discounting nominal cash flows by the nominal discount rate.
• B)discounting real cash flows by the real discount rate.
• C)discounting nominal cash flows by the real discount rate.
• D)discounting nominal cash flows by the nominal discount rate and discounting real cash flows by the real discount rate.

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Definitions:

Kilograms

The base unit of mass in the International System of Units (SI), equivalent to 1000 grams.

Gram

A unit of measure for mass that is equal to 0.001 kilograms.

Milliliters

A measurement of capacity in the metric system, equal to 0.001 liters.

Ounce

A unit of weight in the US customary and British imperial systems, equal to 1/16 of a pound or approximately 28.35 grams.