_____ Does Not Require an Explicit Adjustment for Inflation

question 103

Multiple Choice

_____ does not require an explicit adjustment for inflation.

• A)The nominal rate
• B)The predicted operating cash flows
• C)The tax effect of depreciation
• D)None of these answers is correct

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Definitions:

Salvage Value

The estimated residual value of an asset after its useful life is over and it has been fully depreciated.

Accounting Rate of Return

A financial metric used to assess the profitability of an investment, calculated by dividing the average annual profit by the initial investment cost.

Cost of Capital

The return rate that a company must earn on its investment projects to maintain its market value and attract funds.

Net Present Value

A calculation used to determine the present value of a series of future cash flows minus the initial investment, often used in capital budgeting.