question 6:

suppose the firm's WACC is stated in nominal terms (meaning that inflation expectations are included in the WACC), but the project's expected cash flows are expressed in real dollars (meaning they are not adjusted upward for inflation expectations). In this situation, other things held constant and assuming a positive rate of inflation, the calculated NPVwould

a. be correct

b possibly have bias, but it could be upward or downward

c. be biased upward

d. be biased downward