In 1983,one Could Buy a Model Radio-Controlled Airplane for $11

question 79

Multiple Choice

In 1983,one could buy a model radio-controlled airplane for $11.50 each.Those same planes are available today and the price increased at exactly the rate of inflation.If the CPI today is 220.5 and in 1983 was 105,what is the price of the airplane today?

• A)$24.15
• B)$11.50
• C)$5.48
• D)$2.10

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Definitions:

Internal Rate of Return

A metric used in financial analysis to estimate the profitability of potential investments, calculated as the rate of return that makes the net present value of all cash flows from a particular project equal to zero.

Initial Investment

The amount of money used to start a project, purchase an asset, or initiate operations.

Cash Inflows

Money or funds entering a business from various sources like sales, investments, or financing.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of shareholder wealth maximization, such as purchasing equipment or acquiring another business.