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When adjusting for inflation, there are two methods. The real- rate method where the discount rate is adjusted for inflation and the nominal approach, where
When adjusting for inflation, there are two methods. The real- rate method where the discount rate is adjusted for inflation and the nominal approach, where real cash flows are adjusted to nominal cash flows. What is the primary drawback of the real-rate approach?
a. It is more cumbersome to calculate.
b. Depreciation deductions are adjusted for inflation.
c. There are no drawbacks.
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