Discount rate to apply to different potential investments

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Reference no: EM131924612

1. In determining which discount rate to apply to different potential investments, a company should apply the highest risk-adjusted discount to

a. the purchase of new equipment.

b. a new product in a related field.

c. the repair of old machinery.

d. a new product in a foreign market.

2. Thompson & Co. has no capital rationing constraint. Additionally, the firm's investment alternatives are not mutually exclusive. Therefore, the company should

a. accept all investment proposals that provide returns greater than the after-tax cost of debt.

b. accept all investment proposals that have a positive net present value.

c. accept all investment proposals that have positive cash flows.

d. accept all investment proposals for which it can obtain financing.

Reference no: EM131924612

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