The Required Rate of Return Is a Critical Variable in Discounted

question 9

Multiple Choice

The required rate of return is a critical variable in discounted cash flow analysis because it

• A) measures the risk of the return.
• B) sets the minimum which management will accept for a capital budgeting decision.
• C) is the firm's after-tax discount rate.
• D) is the rate of return that the firm forgoes by investing in a particular project rather than investing in an alternative project of comparable risk.
• E) equals the accrual accounting rate of return, net of tax.

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Definitions:

Capacitor-run Motors

Electric motors that use a capacitor in their circuit for the purpose of running efficiently, often found in HVAC systems and smaller machinery.

Paper And Foil

Materials often used in the construction of capacitors, with paper acting as the dielectric medium and foil as electrodes.

Phase-shift

The change in phase angle between two points in a wave or between two waves, which can affect wave interference and signal transmission.

Operating Torque

The amount of torque a motor needs to produce to maintain its operation under specific conditions.