Which of the following would be more likely to make an unacceptable project appear acceptable?
A)discounting real cash flows with real rates.
B)discounting nominal cash flows with real rates.
C)discounting real cash flows with nominal rates.
D)discounting nominal cash flows with nominal rates.

Question

Quizplus · Accepted Answer

Discounting nominal cash flows with real rates would make an unacceptable project appear acceptable because real rates are typically lower than nominal rates. This mismatch would artificially inflate the present value of future cash flows, making the project seem more attractive than it actually is.

Which of the Following Would Be More Likely to Make