When a Company Is Evaluating an Investment with Discounted Cash

question 63

True/False

When a company is evaluating an investment with discounted cash flows, if the investment has a higher risk, the company will use a lower discount rate, and vice versa.

---

Definitions:

Snowmelt

The process where accumulated snow and ice melt, often contributing to spring floods and replenishing rivers and aquifers.

Storm Runoff

This is the precipitation that flows over land surfaces and eventually enters water bodies, often carrying pollutants.

Freshwater

Water that has a low salt content, found in rivers, lakes, streams, and underground, essential for drinking, agriculture, and industry.

Saltwater

Water containing a significant concentration of salts, typically found in oceans and seas, as opposed to freshwater in lakes and rivers.