Identify the true statements about the impact of inflation on capital budgeting decisions. More than one answer may be correct. Multiple select question. Inflation does not affect capital investment projects with long lives. Inflation will affect all cash flows equally and hence its effect will cancel out. Inflation impact can be adjusted in the discount rate by accounting for inflation. Ignoring inflation in estimating the cash inflows would lead to a bias against accepting capital budgeting projects.

Identify the true statements about the impact of inflation on capital budgeting decisions. More than one answer may be correct. Multiple select question. Inflation does not affect capital investment projects with long lives. Inflation will affect all cash flows equally and hence its effect will cancel out. Inflation impact can be adjusted in the discount rate by accounting for inflation. Ignoring inflation in estimating the cash inflows would lead to a bias against accepting capital budgeting projects.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16MC: When using the NPV method for a particular investment decision, if the present value of all cash...

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