The appropriate discount rate used in NPV calculations in the certainty equivalent approach is the risk-free rate.

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In the certainty equivalent approach, the appropriate discount rate used in NPV calculations is the risk-free rate. This is because the certainty equivalent approach assumes that an individual is risk-averse and would require a higher return to take on riskier investments. Therefore, the risk-free rate is used as a baseline for comparison to determine whether an investment provides a return that compensates for the risk taken.

The Appropriate Discount Rate Used in NPV Calculations in the Certainty