In which of the following situations would it not be appropriate to use the following formula: PV = C0 + C1/(1 + r) + C2/(1 + r)2 + . . . . + Cn/(1 + r)n when determining the present value (PV) of a cash flow stream?
A) when yield curves are flat
B) when short-term and long-term interest rates vary widely
C) when the inflation rate is high
D) when the discount rate is high
Answer: B
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