The proper discount rate to use in calculating certainty equivalent net present value is the ?

Question

a. Risk adjusted discount rate
b. Cost of capital
c. Risk free rate
d. Cost of equity capital

Shahbaz Hayder · Answer

If Company is not leveraged

Cost of capital will be used as discount rate

If Company is leveraged

Weighted Average Cost of Capital will be used as discount rate

Fairouz Asfour · Answer

The weight average cost of capital

Ali Bin Tariq · Answer

B is the answer (Cost of Capital) including both equity & debt

Paolo Borchetta · Answer

WACC. Calculated for the specific market where the company is operating for factors like market risk premium, risk free rate, average equity beta of the sector's piers, etc.

Arwa Ayyash · Answer

the right rate is the WACC ( weighted average cost of Capital )

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The proper discount rate to use in calculating certainty equivalent net present value is the ?

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