1) If risk is reflected in a cash flow forecast by using different discount rates, for different line items or for different years in the forecast: ) it would involve less subjectivity than alternative approaches a ) it would be possible to mix real and nominal rates in a spreadsheet to match different line items forecast in constant and current dollars b it is possible that the ability to better tailor discount rates to particular characteristics of different situations would reduce comparability of investments or projects

1) If risk is reflected in a cash flow forecast by using different discount rates, for different line items or for different years in the forecast: ) it would involve less subjectivity than alternative approaches a ) it would be possible to mix real and nominal rates in a spreadsheet to match different line items forecast in constant and current dollars b it is possible that the ability to better tailor discount rates to particular characteristics of different situations would reduce comparability of investments or projects

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 9E

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