Because the Cost of Capital Includes a Premium Reflecting Inflation

question 45

Multiple Choice

Because the cost of capital includes a premium reflecting inflation expected to occur over the life of the asset,what should decision-makers do?

• A)Ignore anticipated inflation on cash flows.
• B)Consider inflation-adjusted receipts but not expenditures.
• C)Consider inflation adjusted expenditures but not receipts.
• D)Consider inflation-adjusted receipts and expenditures.

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Definitions:

Compliment

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To make a difference to or have an influence on something or someone.

Passenger Service

A range of services provided to individuals traveling or commuting, usually by means of public or private transportation.