Multiple Choice
The appropriate discount rate that analysts use in computing the present value of future cash flows is composed of a risk factor reflecting the riskiness of the project.Thus,
A) the greater a projects risk,the higher the discount rate.
B) the Federal government has the lowest probability of default,so government bodies usually have the lowest risk premiums.
C) a different discount rate would be used to invest a company's funds in a high-risk research and development project rather than low-risk bonds.
D) all of the above.
Correct Answer:
Verified
Correct Answer:
Verified
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