The Cost of Capital Used to Compute the Present Value

question 23

Multiple Choice

The cost of capital used to compute the present value of a project should be the rate that can be earned on:

• A)the overall market portfolio.
• B)the sponsoring firm's return on assets.
• C)a financial asset of comparable risk.
• D)a riskless asset with a similar life span.
• E)the sponsoring firm's return on equity.

---

Definitions:

Babble Effect

A phenomenon in group or network communication where an increase in messages leads to information overload, reducing the overall coherence and effectiveness of communication.

Talk Most

An observational phenomenon where the person who talks the most in a group is often perceived to be the leader or most influential member, regardless of the quality of their contributions.

High Quality

Characterized by superior standards, excellence, or craftsmanship in the delivery of a specific product, service, or performance.

Agentic Leader

An individual who actively takes initiative, makes decisions, and motivates others toward achieving group or organizational goals.