_____ does not require an explicit adjustment for inflation.

Question

Quizplus · Accepted Answer

The tax effect of depreciation is a non-cash expense that already accounts for inflation because it is based on the historical cost of an asset, which doesn't change with inflation. Therefore, it does not require an explicit adjustment for inflation. The nominal rate (A) does not account for inflation and would require adjustment, while predicted operating cash flows (B) would need to be adjusted for inflation to accurately reflect their present value.

_____ Does Not Require an Explicit Adjustment for Inflation