When a company is evaluating an investment proposal with high risk,a low discount rate should be used.

Question

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When a company is evaluating an investment proposal with high risk, a high discount rate should be used. This is because the higher risk associated with the investment requires a higher rate of return to compensate for the risk. Using a low discount rate would underestimate the risk and lead to an overvaluation of the investment.

When a Company Is Evaluating an Investment Proposal with High