Assume That Sales Revenues Are Increasing More Rapidly Than Product

Multiple Choice

Assume that sales revenues are increasing more rapidly than product costs, but that a project's cash flows have been represented as an annuity when calculating NPV.Which of the following problems may occur?

A) nominal cash flows are possibly being discounted with a real rate.
B) real cash flows are possibly being discounted with a nominal rate.
C) nominal cash flows are possibly being discounted with a nominal rate.
D) real cash flows are possibly being discounted with a real rate.