Which of the Following Approaches Could Be Used in Assessing

question 8

Multiple Choice

Which of the following approaches could be used in assessing different projects with different degrees of risk?

• A) Use lower discount rates for risky projects
• B) Use higher discount rates for risky projects
• C) Use IRR - as this will ensure risk is taken into account
• D) Always take the less risky project

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Definitions:

Horizontal Equity

The principle of tax fairness that states individuals with similar income and ability to pay should be taxed at the same rate.

Federal Income Tax

A tax levied by the federal government on the annual income of individuals, corporations, trusts, and other legal entities.

Regressive Tax

A tax system where the tax rate decreases as the taxable amount increases, imposing a heavier burden on lower-income individuals.

Proportional Tax

A tax system where the tax rate is fixed and applied uniformly to all taxpayers, regardless of income level.