Day: March 31, 2021

When a company calculates the net present value of proposed capital expenditure, which rate does it use to discount annual income and expenditure?

Select ONE answer:

1. cost to the company of providing the initial outlay
2. current rate of inflation
3. rate of interest payable on a bank overdraft
4. rate which will give the highest net present value

Show your workings to arrive at your answer, and explain and justify your reasons:

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This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct 
2. Not correct
3. Not correct
4. Not correct

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