Which of the Following Equations Is Incorrect

question 6

Multiple Choice

Which of the following equations is incorrect?

• A) - 1= APR
• B) Equivalent n-Period Discount Rate = (1 + r)ⁿ - 1
• C) 1 + EAR =
• D) Interest Rate per Compounding Period =

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Definitions:

Cost of Capital

The rate of return a company must earn on its investment projects to maintain its market value and satisfy its shareholders and creditors.

Capital Budgeting

The approach taken by a business to appraise potential key projects or investments.

Equity Investment

The act of putting money into financial schemes, shares, property, or a commercial venture with the expectation of achieving a profit, primarily through the ownership of equity.

Separately Funded

A financial arrangement where specific projects or objectives are funded independently from an organization's main operating budget.