Question

Hoskold’s formula is used for

• A. Salting
• B. Speculative rate of return
• C. Depreciation
• D. Ore reserve calculation

Hint:

Hoskold’s formula accounts for both safe and risky components of an investment, making it ideal for evaluating projects with uncertain future returns.

Answer 1

The Correct Option is B

Hoskold’s formula is a financial valuation method used primarily for evaluating investments involving uncertainty, particularly in mining and natural resource projects. The formula helps determine the present value of future cash flows by incorporating both a safe rate and a speculative rate of return. It is especially useful where future income streams are uncertain and involve risk. Therefore, the correct answer is: Speculative rate of return.