A Change in the Discount Rate Used to Evaluate a Specific

question 87

Multiple Choice

A change in the discount rate used to evaluate a specific project will affect the project's

• A)life.
• B)payback period.
• C)net present value.
• D)total cash flows.

---

Definitions:

Interest Rate

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.

Cash Cycle

The period between the outlay of cash for the purchase of inventory and the collection of revenue from its sale.

Cost of Goods Sold

Direct costs attributable to the production of goods sold by a company, including materials and labor.

Inventory Period

The average time it takes for a company to turn its inventory into sales, reflecting the efficiency of its inventory management.