The discount rate (which is also known as the required return, cost of capital, or opportunity cost) is the minimum return that must be earned on a project to leave the firm's market value unchanged.

Question

Quizplus · Accepted Answer

This statement is true. The discount rate represents the minimum acceptable rate of return that investors require for a particular investment. If a project's expected return does not meet or exceed the discount rate, the company's market value may decrease. Therefore, the discount rate is used to evaluate the feasibility of a project and make capital budgeting decisions.

The Discount Rate (Which Is Also Known as the Required