Nominal vs real cash flows.

CFA Level III
#1

Can you help answer the following:

  1. Is this statement incorrect : _ if your property is generating nominal cash flows, your discount rate will include an inflation component? _

2. Nominal cash flows include inflation and do nominal discount rates?

  1. Real rates exclude inflation as do real cash flows?
#2

Nominal cash flows should be discounted at a nominal rate (that includes inflation).

Real cash flows should be discounted at a real rate (that excludes inflation).