For What Reason Is a Higher Discount Rate Is Often

question 7

Multiple Choice

For what reason is a higher discount rate is often used when performing Shareholder Value Analysis (SVA) ?

• A) To weight future cash flows more heavily than current cash flows.
• B) When the desire is to project a more optimistic scenario.
• C) To avoid overestimating the value of the business to the shareholder.
• D) When returns from capital projects are not expected to be achieved in the short term.
• E) When factors that impact cash flows are less predictable.

---

Definitions:

FMVSS-121

Federal Motor Vehicle Safety Standard 121, which outlines the requirements for air brake systems in commercial vehicles to ensure safe stopping distances.

Disc Brakes

Vehicle brake system in which squeeze pressure is applied to a rotor by a caliper. Both pneumatic and hydraulic disc brakes are used on trucks.

Wedge Brakes

A type of brake mechanism where a wedge is used to press brake linings against a drum or rotor to slow or stop motion, often found in heavy vehicles.

Primary Circuit

The main electrical circuit in a system, responsible for providing power to the essential components or functions.