Why is it fairly easy to fall into the trap of discounting real cash flows with nominal rates?
A) It is difficult to determine real discount rates.
B) Increases in nominal cash flows are often not forecast.
C) Inflation does not impact cash flows, but it does impact discount rates.
D) Increases in revenues are offset by increases in costs.

Question

Quizplus · Accepted Answer

The Answer of Why is it fairly easy to fall into the trap of discounting real cash flows with nominal rates?
A) It is difficult to determine real discount rates.
B) Increases in nominal cash flows are often not forecast.
C) Inflation does not impact cash flows, but it does impact discount rates.
D) Increases in revenues are offset by increases in costs.

Why Is It Fairly Easy to Fall into the Trap