If a Company Uses the Same Discount Rate for Evaluating

question 46

Multiple Choice

If a company uses the same discount rate for evaluating all projects, which of the following results is likely?

• A) Accepting poor, high-risk projects.
• B) Rejecting good, low-risk projects.
• C) Accepting only good, low-risk projects.
• D) Accepting no projects.
• E) Answers a and b are correct.

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Definitions:

Account Form

A way of presenting a balance sheet where assets are on one side and liabilities and equity are on the other.

Balance Sheet

A financial statement that summarizes a company’s assets, liabilities, and shareholders’ equity at a specific point in time.

Liabilities

Financial obligations or debts that an entity owes to other parties, which must be settled over time through the transfer of economic benefits including money, goods, or services.

Office Supplies Expense

This refers to the cost associated with consumable supplies used within an office setting, such as pens, paper, and toner.