Which of the Following Are Ways That Inflation Impacts the Capital

question 38

Multiple Choice

Which of the following are ways that inflation impacts the capital budgeting process?
I.Inflation affects future expected cash flows.
II.Inflation is reflected in the firm's discount rate.
III.Inflation increases the general price level.

• A)III only.
• B)I and II only.
• C)I and III only.
• D)I, II, and III.

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Definitions:

Situational Risk

The risk of unfavorable outcomes arising from specific situations or environments.

Ambient Risk

The background level of risk in a given environment or situation, often beyond the immediate control of individuals.

Unnecessary Risk

A hazard or chance of adverse outcomes that could be avoided through careful planning or decision-making.

Field Notes

Written records made by researchers or practitioners during or after their observation of a specific phenomenon or social setting.