In Translating Construction Cost Cash Flows Across Time to Arrive

In translating construction cost cash flows across time to arrive at the present certainty-equivalent value of the construction cost as of time zero, the opportunity cost of capital OCC) that should be used as the discount rate is best described as follows:

A) Use the contract interest rate on the construction loan.
B) Use a rate equal to or only slightly above the riskfree interest rate.
C) Use the development phase OCC reflecting the leverage in the construction project.
D) Use the yield on long-term Government bonds.

Correct Answer:

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