What Effect Does an Increased Discount Rate Have on Project

question 53

Multiple Choice

What effect does an increased discount rate have on project evaluations?

• A)Increases net cash flow
• B)Decreases net cash flow
• C)Increases the probability that a project will be accepted
• D)It has no effect on project evaluation

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Definitions:

Tariffs

Taxes imposed by a government on imported goods, often used to protect domestic industries from foreign competition.

Tax Rate Reduction

A decrease in the percentage at which income, profits, or transactions are taxed, aimed at stimulating economic growth or achieving fiscal policy goals.

Marginal Tax Rates

The rate at which the next additional unit of income will be taxed, often increasing progressively with higher income levels.

Budget Deficit

The situation where a government's expenditures exceed its revenues, leading to the need for borrowing or spending cuts.