The interest rate R in an NPV calculation should always:

A) be the return that the firm could earn on a similar investment.
B) be the riskless interest rate (e.g., U.S. Treasury bills) .
C) be the rate on corporate bonds.
D) be the rate of return available in the stock market.
E) be the interest rate at which the firm has to borrow.

Interest Rate R

Refers to the cost of borrowing money, often expressed as a percentage of the amount borrowed over a specific period.

NPV Calculation

Net Present Value Calculation; a method used to evaluate the profitability of an investment by comparing its present value of cash inflows and outflows over time.

Similar Investment

An investment in assets or projects that have similar risk levels, expected returns, or financial profiles.