The discount rate is the minimum return that must be earned on a project to leave a firm's market value unchanged.

Question

Quizplus · Accepted Answer

This statement accurately defines the concept of discount rate. It is the rate at which future cash flows from a project are discounted to their present value, and if the discounted value is equal to or greater than the initial investment, the firm's market value remains unchanged.

The Discount Rate Is the Minimum Return That Must Be