The Discount Rate Used to Calculate the NPV Should Be

question 131

True/False

The discount rate used to calculate the NPV should be the interest rate that the company could borrow at to finance the proposed capital project.

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Definitions:

Realistic Assumptions

Assumptions made in economic models that aim to closely reflect actual conditions and behaviors in the real world.

Mathematical Terms

Mathematical terms are the specialized vocabulary used to describe concepts, operations, and properties in the field of mathematics.

Scientific Method

A systematic and logical approach to discovering how things in the universe work, based on making observations, forming a hypothesis, conducting experiments, and drawing conclusions.

Economic Hypotheses

Propositions or statements regarding the relationships between economic variables that can be tested with data.