When computing the NPV of a project, if cash flows are discounted at the real cost of capital, then the cash flows should not be adjusted for inflation.

Name: When computing the NPV of a project, if cash flows are discounted at the real cost of capital, then the cash flows should not be adjusted for inflation.
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Question

Quizplus · Accepted Answer

Discounting cash flows at the real cost of capital means accounting for inflation in the cost of capital, so adjusting the cash flows for inflation would result in double-counting.

When Computing the NPV of a Project, If Cash Flows