Which Two of the Following Are Possible Approaches to Adjusting

question 8

Multiple Choice

Which two of the following are possible approaches to adjusting for inflation in project appraisal?

• A) Estimate the cash flow in money terms and use a real discount rate
• B) Estimate the cash flow in real terms and use a real discount rate
• C) Estimate the cash flow in real terms and use a money discount rate
• D) Estimate the cash flow in money terms and use a money discount rate

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Definitions:

Impaired Goodwill

A condition where the market value of goodwill, an intangible asset, falls below its recorded cost on the books, leading to a necessary write-down or adjustment.

Amortization

The process of spreading out a loan or intangible asset cost over a fixed period, affecting a company's financial statements.

Economic Life

The expected period during which an asset remains useful to the owner or within an economy.

Patent Rights

Legal entitlements granted to inventors, giving them exclusive rights to use, make, and sell their inventions for a certain period.