The discount rate used in a net present value analysis is the ________.
A) rate of inflation
B) rate of interest earned on a savings account
C) required rate of return or the hurdle rate
D) rate of interest charged for debt financing of an investment

Question

Quizplus · Accepted Answer

The discount rate used in a net present value analysis is the required rate of return or the hurdle rate, which is the minimum rate of return that an investor or company requires before investing in a project. It is used to discount the future cash flows to their present value, to determine the current value of an investment. Options A, B, and D are not applicable as they are not the discount rate used in net present value analysis.

The Discount Rate Used in a Net Present Value Analysis