The discount rate (RRR) is frequently called the “opportunity cost of funds” or the “cost of capital.
If you want to change selection, open document below and click on "Move attachment"
3. BASIC PRINCIPLES OF CAPITAL BUDGETING #13;
In assumption 5 above, we referred to the rate used in discounting the cash flows as the “required rate of return.” The required rate of return is the discount rate that investors should require given the riskiness of the project. <span>This discount rate is frequently called the “opportunity cost of funds” or the “cost of capital.” If the company can invest elsewhere and earn a return of r, or if the company can repay its sources of capital and save a cost of r, then r is the company’s opportunity cost of funds.
Summary
status
not read
reprioritisations
last reprioritisation on
suggested re-reading day
started reading on
finished reading on
Details
Discussion
Do you want to join discussion? Click here to log in or create user.