A capital investment has a net present value of $1,000.00 at a required rate of return of 10%.At a 12% required rate of return,the net present value of the investment is $100.00.At a 14% required rate of return,the net present value of the investment is $0.The capital investment should be rejected if ________.
A) the required rate of return exceeds 14%
B) the required rate of return exceeds 12%
C) the required rate of return is less than 14%
D) the required rate of return is less than 12%

Question

Quizplus · Accepted Answer

When the required rate of return exceeds 14%, the net present value becomes negative, indicating the investment's returns do not meet the required threshold, hence it should be rejected.

A Capital Investment Has a Net Present Value of $1,000