It is an error when accounting for inflation in capital budgeting to state cash inflows and outflows in real terms and using a nominal discount rate.

Name: It is an error when accounting for inflation in capital budgeting to state cash inflows and outflows in real terms and using a nominal discount rate.
Brand: Quizplus
Rating: 4.8 (55 reviews)

Question

Quizplus · Accepted Answer

Using real cash flows with a nominal discount rate leads to an inconsistency, as the nominal rate includes inflation, while real cash flows do not.

It Is an Error When Accounting for Inflation in Capital