The return earned by the shareholders in the project is measured by examining the cash flows that pass between the project company and the shareholders themselves. The Model reports four versions of this ratio: pre- and post-tax, and in real and nominal terms. The one that the bidder has chosen to focus on
■ is post-tax, because it gives a measure of the return to the shareholders alone, rather than to them and to the government combined, and therefore better measures the consequences for a bidder of any chosen bid price;
■ is in nominal terms, as has been standard practice in recent years. (The real terms measures isolate the element of the return that is not due merely to the action of inflation. They were much focussed on a decade or more ago when inflation was higher and so accounted for most of the return. It is still standard practice to calculate them, even though inflation rates are now much lower; but there are theoretical reasons why the nominal versions are generally favoured.)