Asked by Addie Maxwell on Jun 24, 2024
Verified
The rate of return k is also referred to as the
A) discount rate.
B) hurdle rate.
C) opportunity cost of capital.
D) all of the above
Discount Rate
In finance, the interest rate used to discount future cash flows to their present value, often reflecting the risk or time value of money.
Opportunity Cost
The cost of missing out on the next best alternative when making a decision.
- Gain insight into the foundational aspects of financial examination in supply chains, including the process of discounting cash flows and calculating return rates.
Verified Answer
JJ
Joban JalwanaJun 27, 2024
Final Answer :
D
Explanation :
The rate of return k can be referred to by any of these terms, so all of the choices are correct. The discount rate refers to the rate at which future cash flows are discounted to their present values. The hurdle rate is the minimum rate of return required by an investor or company before any investment or project is undertaken. The opportunity cost of capital is the rate of return that could have been earned on an alternative investment with similar risk. Therefore, all of these terms are used interchangeably for the rate of return k.
Learning Objectives
- Gain insight into the foundational aspects of financial examination in supply chains, including the process of discounting cash flows and calculating return rates.