Posted: May 3rd, 2016

what increase in specific prices over general price level would be reported, stated in year-end dollars?

In 20X4, Olentangy Health Care (OHC)’s cost of capital was 6%. Its investments on a historical cost valuation basis are $80,000, on a replacement cost basis are $100,000, and on a current market value basis are $110,000. If you were on OHC’s board, what minimum level of annual cash flow would you require in order to continue operations and proceed with planned significant new investments?

A. $4,800
B. $6,000
C. $6,600
D. $8,000

Inflation was 8 percent during the most recent year and your organization’s investment in land rose 12 percent. If the beginning appraised land value was $1,000,000, what increase in specific prices over general price level would be reported, stated in year-end dollars?

A. $20,000
B. $40,000
C. $43,200
D. None of the above

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