How to Estimate a Project Specific Discount Rate


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question 1 of 3

Jane's company is considering investing in a new expansion project. To figure out if it is viable, Jane calculates what the project will have to return based on the risk and returns of her company at large. What is Jane calculating?

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1. Ed is considering investing in a new asset for his company. Before doing that, he wants to calculate the company's cost of capital. Which of the following should Ed take into consideration?

2. Sarah is the CEO of a fashion company that only makes sweaters. What type of company does she have?

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About This Quiz & Worksheet

This quiz/worksheet combo will quickly test your understanding of different cost assessment methods. You will be asked to identify approaches based on their descriptions.

Quiz & Worksheet Goals

In this quiz you'll measure your understanding of:

  • What you call a company that only makes one product
  • Which approach is the least empirical
  • What you are calculating if you measure project returns versus risk and assets

Skills Practiced

  • Reading comprehension - ensure that you draw the most important information from the material, such as what method of measurement and analysis is less empirical than others
  • Information recall - access the knowledge you've gained regarding what approach you are using when making a cost comparison between companies that put out a single product
  • Knowledge application - use your knowledge to answer questions about what approach or strategy is being used based on given analytical information

Additional Learning

Would you like a deeper understanding of these forms of analysis? Review the lesson titled How to Estimate a Project Specific Discount Rate to learn about concepts like:

  • What a company's level of risk does for its capital outlays
  • Examples of approaches to calculate the worthiness of an investment
  • How multi-product companies can assess the costs of new divisions