When calculating NPVs,if cash flows are in nominal terms (i.e.,include inflation),the discount rate should also be nominal; if cash flows are in real terms(i.e.,are net of inflation),a real discount rate should be used. An adjustment for risk can be made by adding a risk premium to the discount rate.❑ When calculating NPVs, if cash flows are in nominal terms (i.e., include inflation), the discount rate should also be nominal; if cash flows are in real terms(i.e., are net of inflation), a real discount rate should be used. ❑ An adjustment for risk can be made by adding a risk premium to the discount rate