An investment with a high risk margin has a high discount rate,which makes the net present value

Name: An investment with a high risk margin has a high discount rate,which makes the net present value
Brand: Quizplus
Rating: 4.8 (54 reviews)

Question

Quizplus · Accepted Answer

A high discount rate means a lower present value of future cash flows, so the net present value would be lower. This is because the higher risk associated with the investment demands a higher return to compensate for the additional risk.

An Investment with a High Risk Margin Has a High