A Cost of Living Adjustment or COLA

question 70

Multiple Choice

A cost of living adjustment or COLA

• A)is usually pegged to the GDP deflator.
• B)increases the nominal value of a contract as the rate of inflation increases.
• C)protects the purchasing power of uninvested cash balances.
• D)all of these.

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Definitions:

Capital Budgeting

The process of planning and managing a company's long-term investments in major assets.

Investment Required

The total amount of capital needed to undertake a specific project, purchase, or investment.

Project Profitability Index

A calculation used to determine the relative profitability of a project by dividing the present value of future cash flows by the initial investment cost.

Salvage Recovered

The amount of money or value received from selling off the remains of assets after their useful life is over or after a casualty loss.