-The Data in the Table Above Show the Consumption by Families

question 18

Multiple Choice

-The data in the table above show the consumption by families in a small (poor) economy. The families consume only salt and bread. The reference base period is 2011. The inflation rate between 2011 and 2012 was

• A) 23.1 per cent.
• B) 18.8 per cent.
• C) 52.5 per cent.
• D) 118.8 per cent.
• E) 123.1 per cent.

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Definitions:

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess profitability of investments.

After-Tax Cost

The actual cost of an investment or financing after taking into account the effects of taxation.

Cost of Equity

The theoretical compensation a company provides to its shareholders for the risk associated with investing their money.

Net Present Value

A method used in capital budgeting to analyze the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.