Which of the Following Is Not True Regarding the Appropriate

question 9

Multiple Choice

Which of the following is not true regarding the appropriate discount rate to be used in conjunction with discounted cash flow (DCF) decision models?

• A) For projects of "above average" risk, the appropriate discount rate is the weighted-average cost of capital (WACC).
• B) It includes an estimate of the after-tax cost of debt.
• C) It can differ across investment projects, according to perceived risk of each project.
• D) It is also sometimes referred to as the "hurdle rate" for capital budgeting purposes.
• E) It can properly be viewed as the "minimum required rate of return" for a proposed investment.

---

Definitions:

Frequency Distribution

A summary of how often each different value occurs in a dataset, typically represented in a table or graph.

Pie Graph

A type of graph in which a circle is divided into sectors that each represent a proportion of the whole.

Frequency Distribution

A statistical tool showing how the numbers are distributed across various values in a dataset.

Sample

A subset of a larger population selected for measurement, observation, or questioning to provide statistical information about the whole.