Answer:
C. Discount rate or required return.
Explanation:
This is known to be a key concept in equity evaluation and plays a vital role in corperate finance.
It can also be explained as the required rate of return is the minimum return an investor will accept for owning a company's stock, as compensation for a given level of risk associated with holding the stock. Its application is also used in corporate finance to analyze the profitability of potential investment projects.
The formula also uses the risk free rate of return, which is typically the yield on short-term U.S. Treasury securities. The final variable is the market rate of return, which is typically the annual return of the investor. The required rate of return is the minimum return an investor will accept for owning a company's stock, that compensates them for a given level of risk.
Inflation also is been factored in the calculation, which finds the minimum rate of return an investor considers acceptable, taking into account their cost of capital, inflation and the return available on other investments. It is also a subjective minimum rate of return, and a retiree will have a lower risk tolerance and therefore accept a smaller return than an investor who recently graduated college.
Answer:
Ummm yeah !!!!!!!!!!!!!!!!!!!!!!!!!
12 I think is the answer it has jus been answered in my test
Answer:
Project 1
Explanation:
The computation of the payback period is shown below:
As we know that
Payback period = Initial investment ÷ Net cash flow
For project 1
The payback period would be
= $60,000 ÷ $20,000
= 3 years
For project 2
The payback period would be
= $80,000 ÷ $20,000
= 4 years
Based on the payback period, project 1 should be chosen as the initial amount would be recovered in 3 years instead of 4 years shown in project 2