1. When the real interest rate is less than the nominal rate of interes, then:

A) Disinflation must be occurring

B) Investment returns cannot increase the purchasing power of an investment

C) Nominal cash flows should be discounted with real rates

D) The rate of inflation must be positive

2. The purpose of a sensitivity analysis is to show how:

A) The optimal level of capital expenditures

B) How price changes affect break-even volume

C) Seasonal variation in product demand

D) How variables in a project affect variability