Which of the following most accurately describes the discount rate used in NPV and IRR analyses?

Question

Quizplus · Accepted Answer

The discount rate used in both NPV (Net Present Value) and IRR (Internal Rate of Return) analyses is the required rate of return, also known as the "hurdle rate." The hurdle rate is the minimum return that an investment must generate in order to be considered viable, and it takes into account factors such as the risk level of the investment, inflation, and opportunity cost. The other options listed (A, B, and D) are not accurate descriptions of the discount rate used in these analyses.

Which of the Following Most Accurately Describes the Discount Rate