Suppose That 1982 Is the Base Year for the Consumer

question 150

Multiple Choice

Suppose that 1982 is the base year for the Consumer Price Index (CPI) and in 2019 the CPI is 270.What does this "270" mean?

• A) What cost $100 in 1982 on average cost 270 times as much in 2019.
• B) What cost $100 in 1982 on average cost $270 in 2019.
• C) What cost $100 in 1982 on average cost 0.27 times as much in 2019.
• D) What cost $100 in 1982 on average cost $27 more in 2019

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Definitions:

MIRR

Modified Internal Rate of Return, a financial measure used to evaluate the profitability of investments, adjusting for differences in cash flow timing and reinvestment rates.

Cost of Capital

The rate of return that a company needs to earn on its investment projects to maintain its market value and satisfy its investors and creditors.

Internal Rate of Return

The discount rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero.

Multiple IRRs

The situation where a project has more than one internal rate of return, occurring due to unconventional cash flows.