For net present value calculations, the rate of return that one could earn by investing in another project with similar risk is known as the:

A) real interest rate.
B) nominal interest rate.
C) prime interest rate.
D) opportunity cost of capital.

Question

Hunter Carnes · Accepted Answer

Final Answer : D, Explanation :  The opportunity cost of capital is the rate of return that could be earned by investing in another project with similar risk, making it the best choice for this question. The real interest rate is the nominal interest rate adjusted for inflation, while the nominal interest rate is the stated interest rate without inflation adjustments. The prime interest rate is the rate that banks charge their most creditworthy customers.

For net present value calculations, the rate of return that one could earn by investing in another project with similar risk is known as the:

A) real interest rate.
B) nominal interest rate.
C) prime interest rate.
D) opportunity cost of capital.

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Learning Objectives

Related questions

For net present value calculations, the rate of return that one could earn by investing in another project with similar risk is known as the:A) real interest rate.B) nominal interest rate.C) prime interest rate.D) opportunity cost of capital.

Definitions

Learning Objectives

Learning Objectives

Related questions

For net present value calculations, the rate of return that one could earn by investing in another project with similar risk is known as the:

A) real interest rate.
B) nominal interest rate.
C) prime interest rate.
D) opportunity cost of capital.