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NEW QUESTION: 1
When projects are appraised using discounted cash flow methods, two approaches to dealing with inflation could be used. These are:
1.To exclude inflation from the estimated future cash flows and to apply a discount rate based on the money cost of capital.
2.To include inflation in the estimated future cash flows and to apply a discount based on the real cost of capital.
Which ONE of the following combinations (true/false) is correct?
A. Statement 1 = False, Statement 2 = True
B. Statement 1 = False, Statement 2 = False
C. Statement 1 = True, Statement 2 = True
D. Statement 1 = True, Statement 2 = False
Answer: B

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