Which of the Following Is NOT a True Statement

question 77

Multiple Choice

Which of the following is NOT a true statement?

• A)Inflation always affects future levels of sales and expenses equally.
• B)Inflation affects the firm's cost of capital.
• C)Actual cash flows should be discounted with nominal discount rates.
• D)Inflation-adjusted cash flows should be discounted with real discount rates.

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Definitions:

Market Rate

The prevailing interest rate available in the marketplace for instruments of similar risk and maturity or the current price of a market-traded security.

Covenants

Agreements or clauses within financial contracts that impose certain conditions or restrictions on the parties involved.

Lender Fraud

Illegal practices committed by a lender, including deceptive actions to take advantage of a borrower or to approve a loan under false pretenses.

Premium On Bonds Payable

The amount by which a bond's selling price exceeds its face value, reflecting higher market interest rates at the time of issuance.