The Possibility That More Than One Discount Rate Can Cause

question 15

Multiple Choice

The possibility that more than one discount rate can cause the net present value of an investment to equal zero is referred to as:

• A)duplication.
• B)the net present value profile.
• C)multiple rates of return.
• D)the AAR problem.
• E)the dual dilemma.

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Definitions:

Accrued Income Taxes

Taxes that have been incurred, but not yet paid, usually recognized at the end of an accounting period.

Operating Activity

Activities that are part of the day-to-day operations of a business, such as selling, general, and administrative expenses.

Treasury Stock

Shares that were issued and later reacquired by the issuing company.

Depreciation Expense

The distribution of a physical asset's cost across its life of utility.