When operating in an inflationary environment, what adjustment should be made to the discount rate used when calculating a project's net present value?

Question

Quizplus · Accepted Answer

In an inflationary environment, the discount rate should be increased to account for the higher expected inflation. This adjustment ensures that the future cash flows are discounted at a rate that reflects the decreased purchasing power of money over time.

When Operating in an Inflationary Environment, What Adjustment Should Be