If All Projects Are Assigned the Same Discount Rate for Purposes

question 2

Multiple Choice

If all projects are assigned the same discount rate for purposes of evaluation,which of the following could occur?

• A)Low-risk projects could be rejected when in fact they are good investment choices.
• B)High-risk projects could be accepted when in fact they are poor investment choices.
• C)High-risk projects could be accepted when in fact they are good investment choices.
• D)All of the choices could occur when using a single discount rate for all projects.

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Definitions:

Direct Method

An approach to preparing the cash flow statement where actual cash flows from operating activities are listed.

Support Departments

Units within an organization that provide services or support to the operational departments, but do not directly contribute to the production of goods or services.

Cafeteria Department Costs

The expenses associated with operating a cafeteria within an organization, including food supplies, labor, and equipment.

Reciprocal Services Method

An approach used in cost accounting to allocate costs between departments that provide services to each other.