1. Inflation is really a measure of:

a) The size of the exponent in a future worth equation

b) The blue book value of a depreciable asset

c) The time it takes to recover an initial investment in equipment

d) The change in the value of a country's currency

2) For a market interest rate of 12% per year and an inflation rate of 7% per year, the real interest rate per year is closest to:

a) 4.7%

b) 7%

c) 12%

d) 19.8%

3) An asset with a first cost of $50,000 is to be depreciated by the straight line method over a 5 year period. The asset will have annual operating costs of $35,000 and a salvage value of $10,000. According to the straight line method, the book value at the end of year 3 will be closest to:

a) $8,000

b) $20,000

c) $24,000

d) $26,000

4) All of the following assets can be depreciated, except:

a) A bulldozer

b) A copper mine

c) A surgical robot

d) A conveyor belt

5) For a real interest rate of 18% per year and an inflation rate of 3% per year, the market interest rate per year is closets to:

a) 20% 

b) 22%

c) 24%

d) 26%