Question

for capital recovery calculations used for aw analysis it is important to not include inflation because current capital dollars must be recovered with the future un-inflated dollars.

true or false

Answer 1

Answer - False

This statement is false because the current capital dollars must be recovered with the future Inflated dollars and not the Uninflated dollars. If the un inflated dollars will be used , a lesser amount will be recovered for the current capital dollars. Hence the consideration of the rate of inflation is necessary here , as because of it future money becomes less valuable and present money is more valuable. To cover up this difference and for the accuracy , inflated dollars should be taken.