(Appendix 12A)The real and nominal methods are most closely associated with:

Question

Quizplus · Accepted Answer

Real and nominal methods are used in calculations of net present value (NPV) which is a widely used capital budgeting technique for evaluating investment projects. The real method takes into account inflation while the nominal method does not. NPV is calculated by discounting future cash flows at a given rate (usually the cost of capital) and subtracting the initial investment.

(Appendix 12A)The Real and Nominal Methods Are Most Closely Associated