📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    Question

    The cost of capital is used as a discount rate

    in:
    A Payback Period method. Correct Answer Incorrect Answer
    B Accounting Rate of Return method. Correct Answer Incorrect Answer
    C Net Present Value method. Correct Answer Incorrect Answer
    D Earnings Per Share calculation. Correct Answer Incorrect Answer
    E Current Ratio analysis. Correct Answer Incorrect Answer

    Solution

    In the NPV method, the cost of capital (or WACC) is used as the hurdle rate to discount future cash flows to their present value.

    Practice Next
    More Capital Budgeting Questions
    ask-question