The Interest Rate R in an NPV Calculation Should Always

question 36

Multiple Choice

The interest rate R in an NPV calculation should always:

• A) be the return that the firm could earn on a similar investment.
• B) be the riskless interest rate (e.g., U.S. Treasury bills).
• C) be the rate on corporate bonds.
• D) be the rate of return available in the stock market.
• E) be the interest rate at which the firm has to borrow.

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