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Question 1025  real and nominal returns and cash flows

What proportion of managers are evaluating projects correctly, based on table 8 from Meier and Tarhan's (2006) survey of corporate managers?

Table 8: Consistency of nominal or real hurdle rates and cash flows
Hurdle rate Cash flows Total
Nominal Real
Nominal 29.8% 11.6% 41.3%
Real 19.8% 38.4% 58.7%
Total 49.6% 50.4% 100.0%


Table 8 footnote: The rows in this cross-tabulation show whether the firm uses a nominal or real hurdle rate, the columns indicate whether cash flows are calculated in nominal or real terms. The fractions denote the number of firms for each combination relative to the total of 123 respondents that responded to both separate survey questions.

What proportion of managers are evaluating projects correctly?