The Appropriate Discount Rate for a Firm Is

question 60

Multiple Choice

The appropriate discount rate for a firm is:

• A)the bank rate.
• B)its opportunity cost of capital.
• C)the prime rate.
• D)its depreciation rate.

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Definitions:

Perfectly Elastic

Describes a situation where the quantity demanded or supplied changes infinitely in response to any change in price.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price, where market supply and demand balance each other.

Equilibrium Price

The market price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Demand

The amount of a product or service that buyers are prepared and capable of buying at different price levels over a specific time frame.