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Which of the following have the same meaning as "interest rate" 1. capital cost 2. all...

Which of the following have the same meaning as "interest rate"

1. capital cost

2. all of the above

3. opportunity cost

4. discount rate

5. Required return

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Answer #1

interest rate is also known as discounting rate and it is used in calculation of most of the capital budgeting methods like net present value or internal rate of return.

interest rate is always taken as a discounting rate which is to be assigned in various calculations and this will be reflecting the the discounted rate used in calculation of cash flows related to future.

it is not having the same meaning as capital cost or opportunity cost or required return.

Correct answer is Option (4) discount rate.

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