Susan Is Evaluating an Engineering Project

question 8

Multiple Choice

Susan is evaluating an engineering project. She assumes zero inflation for the duration of the project. With respect to this situation, which statement is consistent with the subject matter of engineering economics?

• A)A zero inflation assumption is always a good one.
• B)A zero inflation assumption is not realistic but it is better than assuming some uncertain inflation rate.
• C)A zero assumption is not a bad one for the base case, but then the project should be evaluated under different values in some range to see how inflation affects the project.
• D)Since in Canada inflation is low, it is possible to neglect it.
• E)The highest historical inflation rate must be chosen instead.

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