In certainty-equivalent approach, adjusted cash flows are discounted at __________.

Accounting Rate of Return

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Internal Rate of Return

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Hurdle Rate

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Risk-free Rate

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Solution

The correct option is D Risk-free Rate
In Certainty-equivalent approach, adjusted cash flows are discounted at Risk free Rate.
In this approach the investors will analyse the risk free and risky cash flows. They will evaluate the risk and understand , how much money will be received with certainty.

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List-I	List-II
(a) Pay-back Rate of Return	(i) Discounted Cash Flow Technique
(b) Internal Rate of Return	(ii) Compounded values of investments and returns
(c) Benefit Cost Ratio	(iii) Crude method for project evaluation
(d) Net Terminal Value Method	(iv) Varying sized projects evaluation

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