If We Were to Select the Appropriate Discount Rate for a Project,this

question 56

Multiple Choice

If we were to select the appropriate discount rate for a project,this rate would reflect ________.

• A)the risk-free rate for the currency picked for the project
• B)the inflation rate for the currency not picked for the project
• C)the default premium for the currency picked for the project
• D)the inflation rate for the currency picked for the project

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Definitions:

Construction Loan

A short-term loan used to finance the building of a property or real estate project, usually converting to a long-term loan after completion.

Notes Payable

Financial obligations or loans represented by a promissory note that a company needs to pay back.

Successful-efforts Method

An accounting method used in the energy industry for recognizing and capitalizing only those expenses associated with successfully locating new oil or natural gas reserves.

Full-cost Method

A method of accounting for all expenditures associated with the exploration and development of oil and gas reserves as capitalized costs, which are then amortized over the total volume of proven resources.