1
Correct answer: B
✔ Reason:
Risk-adjusted discount rate is a standard method to incorporate risk in capital
budgeting (study guide principle).
A is incomplete (ignores unsystematic risk context).
D is false → diversification reduces unsystematic risk.
2
Correct answer: D
✔ Reason:
Life cycle cost includes all costs over the asset life, including procurement.
B is also true in theory, BUT exam instruction = select only one, and D is the most
directly correct per lifecycle costing definition.
3
Correct answer: A
✔ Reason:
Real interest rate removes inflation effects.
C is incorrect (calculation wrong).
D is false → inflation reduces purchasing power.
4
Correct answer: B
✔ Reason:
Correct answer: B
✔ Reason:
Risk-adjusted discount rate is a standard method to incorporate risk in capital
budgeting (study guide principle).
A is incomplete (ignores unsystematic risk context).
D is false → diversification reduces unsystematic risk.
2
Correct answer: D
✔ Reason:
Life cycle cost includes all costs over the asset life, including procurement.
B is also true in theory, BUT exam instruction = select only one, and D is the most
directly correct per lifecycle costing definition.
3
Correct answer: A
✔ Reason:
Real interest rate removes inflation effects.
C is incorrect (calculation wrong).
D is false → inflation reduces purchasing power.
4
Correct answer: B
✔ Reason:
