The Required Rate of Return Used in the Net Present

question 54

Multiple Choice

The required rate of return used in the net present value model can also be called the

• A)hurdle rate.
• B)minimum acceptable rate of return.
• C)cost of capital.
• D)discount rate.
• E)all of these.

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Definitions:

Fixed Costs

Charges that stay the same no matter the scale of production or sales, like rent, salaries, and insurance.

Variable Costs

Expenses that vary depending on the amount of products or services a company generates.

Mixed Cost

A cost that contains both variable and fixed cost elements, changing in total with changes in activity level but not in the same proportion.

Variable Costs

Expenditures that adjust in alignment with production levels or sales quantities, notably including labor and raw materials.