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Your firm is considering the purchase of a company called Frost. What rate of return...

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Finance

Your firm is considering the purchase of a company called Frost. What rate of return should be used to compute the NPV of the proposed purchase?

The rate of interest charged by a bank for a loan similar in size to the cost of the purchase

A discount rate equal to Frosts net profit percentage

The discount rate applicable to other investments with similar risks

A discount rate that makes the NPV of the proposed purchase positive

A discount rate equal to Frosts current return on equity

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