How does inflation affect investments? A. It reduces the monetary value of the rate of return. B. It creates a negative market psychology and decreases asset prices. C. It makes investments less liquid. D. It increases the market price of investments.

You are in the market for a new refrigerator for your company’s lounge, and you have narrowed the search down to two models. the energy efficient model sells for $700 and will save you $45 at the end of each of the next five years in electricity costs. the standard model has features similar to the energy efficient model but provides no future saving in electricity costs. it is priced at only $500. assuming your opportunity cost of funds is 6 percent, which refrigerator should you purchase