What discount rate should be used for calculating net present values of capital investment alternatives?

Question

Quizplus · Accepted Answer

The opportunity cost of capital represents the rate of return that an investor could earn on an alternative investment with similar risk. This rate reflects the return that investors require for investing in a particular asset. Therefore, it makes sense to use the opportunity cost of capital as the discount rate when calculating the net present value of capital investment alternatives.

What Discount Rate Should Be Used for Calculating Net Present