The discount rate used to evaluate a firm's projects should:

Question

Quizplus · Accepted Answer

The discount rate used to evaluate a firm's projects should reflect the opportunity costs of investing in either the firm's project or a similar project, as well as be high enough to compensate investors for the risk of the project. Therefore, both option (a) and (b) are true. The discount rate may vary across different projects based on their respective risks and required returns, so option (c) is not correct. Option (e) is not correct because option (c) is not accurate.

The Discount Rate Used to Evaluate a Firm's Projects Should