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The Current General Purchasing Power of Cash Flows Is Determined

Question 2

Multiple Choice

The current general purchasing power of cash flows is determined by


A) Applying a general rate of inflation to all cash flows
B) Including an inflation factor when determining the hurdle rate and then applying it to all cash flows
C) Ignoring inflation in the calculations as it affects various items differently and ultimately the effects cancel each other out
D) Determining and applying the specific rate of inflation for each item in a cash flow as well as specific rates of inflation to each type of cash flow
E) Determining the monetary cash flows from each item and deflating these amounts by the general rate of inflation

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