The Rate of Interest That Produces a Zero Net Present

question 92

Multiple Choice

The rate of interest that produces a zero net present value when a project's discounted cash operating advantage is netted against its discounted net investment is the

• A)cost of capital.
• B)discount rate.
• C)cutoff rate.
• D)internal rate of return.

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Definitions:

Reasonable Person Test

A legal standard used to determine whether an individual's behavior can be considered reasonable under particular circumstances, compared to how a typical person might act.

Defendant

An entity, firm, or person facing legal action or charges in a legal forum.

Duty of Reasonable Care

An obligation to act with the level of care, attention, and prudence that a reasonable person would under the same circumstances to prevent harm to others.

Abnormally Dangerous Activity

An activity that carries a high risk of harm or damage that cannot be completely guarded against through the exercise of reasonable care and which is not commonly performed in the area.