Using a Higher Risk Adjusted Discount Rate Makes NPV Smaller

question 113

True/False

Using a higher risk adjusted discount rate makes NPV smaller so projects are less likely to be accepted. But a higher rate has no effect on the computed value of IRR and therefore doesn't make any difference to the likelihood of project acceptance.

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Definitions:

Normative, Nonrational, Affective

Describes decision-making or behavior guided by societal norms and emotional responses rather than logical rationale.

Structuration

The theory that describes the two-way process by which social systems are produced and reproduced through individuals' use of rules and resources in interaction.

Anthony Giddens

A British sociologist renowned for his theory of structuration, which explores the interplay between individual agency and social structure.

Rules and Resources

Concepts in sociology and social theory referring to the guidelines that dictate social action and the means available to individuals and groups to achieve their goals.