The Appropriate Discount Rate to Be Used When Analyzing an Investment

question 367

Multiple Choice

The appropriate discount rate to be used when analyzing an investment project is _______________.

• A) The rate of return that will result in the highest NPV.
• B) The internal rate of return on that investment.
• C) Equal to the cost of capital based on the firm's historical assets.
• D) The rate of return financial markets offer on investments of similar risk.
• E) The rate of interest the firm would pay if it sold bonds.

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