1 Real interest rate is a combination of inflation rate and

1) Real interest rate is a combination of inflation rate and market interest rate, and increase when those rates increase. True or False

2) To have a higher NPV of an after-tax CFS, business owners would always prefer lower depreciation rates. True or False

1.False: Real Interest Rate is a Nominal interest rate (market Interst rate) minus the Inflation rate. Therefore above statement is False.

2. False: Net present value (NPV) is the present value of the future value after-tax cash flows minus initial investment.