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Question
The cost of capital is a discount rate that is used in determining the __________________.
The cost of capital is a discount rate that is used in determining the __________________.
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Solution
The correct option is C The present value of future cash flows
The discount rate is the interest rate used to determine the present value of future cash flows in standard discounted cash flow analysis. Many companies calculate their weighted average cost of capital and use it as their discount rate when budgeting for a new project.
The discount rate is the interest rate used to determine the present value of future cash flows in standard discounted cash flow analysis. Many companies calculate their weighted average cost of capital and use it as their discount rate when budgeting for a new project.
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