Which of the Following Statements About Discount Rates Is True

question 43

Multiple Choice

Which of the following statements about discount rates is true?

• A) The higher the marginal tax rate, the higher the discount rate for future cash flows should be.
• B) The higher the degree of risk involved in a transaction, the higher the discount rate for future cash flows should be.
• C) The longer the time period over which a transaction will generate cash flows, the higher the discount rate should be.
• D) The greater the amount of cash generated by a transaction, the higher the discount rate should be.

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Definitions:

Paid Work

Employment or tasks performed in exchange for compensation, including wages, salary, or other forms of payment.

Unpaid Work

Labor that is not rewarded with financial compensation, often including domestic chores, caregiving, and volunteer activities, crucial but undervalued in the economy.

Gendered Division of Labour

The allocation of different tasks, responsibilities, or jobs to men and women, typically based on societal norms and stereotypes rather than individual ability or preference.

Paid Hours

The amount of time an individual is compensated for working by their employer.