The annual rate of return is variously referred to as
A) the cost of capital.
B) the opportunity cost.
C) the discount rate.
D) all of the above.

Question

Quizplus · Accepted Answer

The annual rate of return is commonly referred to as the cost of capital because it is the rate of return required by investors to make an investment in the business. It is also referred to as the opportunity cost since it represents the returns forgone by investing in the project as opposed to pursuing an alternative opportunity. Finally, the annual rate of return is the discount rate that is used to determine the present value of future cash flows, making option D the correct choice.

The Annual Rate of Return Is Variously Referred to as