For purposes of applying the net present value and the internal rate of return methods,the rate chosen to measure the time adjusted value of money is known as the:
A) Internal rate.
B) Average rate.
C) Prime rate.
D) Discount rate.
E) Compound rate.

Question

Quizplus · Accepted Answer

The discount rate is the rate used to discount future cash flows to their present value. It is the best choice for measuring the time-adjusted value of money when using net present value and internal rate of return methods. Other rates such as internal rate, average rate, prime rate, or compound rate are not specifically used in these methods.

For Purposes of Applying the Net Present Value and the Internal