What Discount Rate Should Be Used for Calculating Net Present

question 42

Multiple Choice

What discount rate should be used for calculating net present values of capital investment alternatives?

• A) Corporate borrowing rate
• B) Desired rate of return
• C) Internal rate of return
• D) Corporation's return on investment

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Definitions:

Expected Price

The forecasted price of an asset, based on current information and analysis.

Intensively Sold

A marketing strategy that aims for widespread distribution and makes the product available at as many retail locations as possible.

Stock Prices

The cost of purchasing a share of a company, which fluctuates based on supply and demand, company performance, and market conditions.

Insiders

Individuals within a corporation who have access to confidential information about the company, often subject to trading restrictions.