Which of the following is a correct method of adjusting for inflation when calculating net present value?
A) Estimate the future cash flows by multiplying by the specific inflation of each cash inflow and outflow item, and then discount using the real rate of return.
B) Estimate the cash flows in real terms and use a real discount rate.
C) Estimate the cash flows in money terms and use a real discount rate.
D) Estimate the cash flows in real terms and use a money discount rate.
Correct Answer:
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