Which of the following NPV analysis methods requires adjustment of a project's terminal value for inflation?
$\begin{array}{llcc}
\underline{\text { Real }}&\underline{\text { Nominal }}
\end{array}$

a. $\begin{array}{llcc}
\text { Yes }&\quad\text {Yes }
\end{array}$

b.$\begin{array}{llcc}
\text { No }&\quad\text {No }
\end{array}$

c.$\begin{array}{llcc}
\text { Yes }&\quad\text {No }
\end{array}$

d. $\begin{array}{llcc}
\text { No }&\quad\text {Yes }
\end{array}$

Question

Which of the following NPV analysis methods requires adjustment of a project's terminal value for inflation? 
$\begin{array}{llcc}
\underline{\text { Real }}&\underline{\text { Nominal }}
\end{array}$

a. $\begin{array}{llcc}
\text { Yes  }&\quad\text {Yes }
\end{array}$

b.$\begin{array}{llcc}
\text { No  }&\quad\text {No }
\end{array}$

c.$\begin{array}{llcc}
\text { Yes  }&\quad\text {No }
\end{array}$

d. $\begin{array}{llcc}
\text { No }&\quad\text {Yes }
\end{array}$

Quizplus · Accepted Answer

The nominal NPV method requires adjustment of a project's terminal value for inflation because it uses nominal cash flows and discount rates. The real NPV method does not require this adjustment because it uses real cash flows and discount rates.

Which of the Following NPV Analysis Methods Requires Adjustment of a Project's