General Studies · Project Appraisal
In Project Appraisal, when calculating the Net Present Value (NPV), what is the appropriate discount rate to use?
- 1The project's own Internal Rate of Return (IRR).
- 2The risk-free rate of return (e.g., 10-year G-Sec yield).
- 3The Weighted Average Cost of Capital (WACC) of the firm.✓
- 4The nominal interest rate on the term loan.
Correct answer
The Weighted Average Cost of Capital (WACC) of the firm.
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