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:

Ethical Issues

Moral challenges affecting decisions and actions in personal and professional settings.

Project Managers

Project managers are professionals responsible for planning, executing, and closing projects, overseeing teams, resources, and scope to achieve project objectives.

Critical Path

A method used in project management to identify the longest sequence of dependent tasks that determine the shortest possible duration to complete the project.

Activity Durations

The individual time periods that each task or activity within a project is expected to take from start to completion.