The Appropriate Discount Rate That Analysts Use in Computing the Present

question 20

Multiple Choice

The appropriate discount rate that analysts use in computing the present value of future cash flows is composed of an increase reflecting the inflation expected to occur over the life of the project.Thus,

• A)the higher the expected inflation,the higher should be the discount rate.
• B)the higher the expected inflation,the lower should be the discount rate.
• C)the lower the expected inflation,the higher should be the discount rate.
• D)all of the above.

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