When using the net present value technique to evaluate the quality of an investment, if the resulting NPV is positive, the cost of capital will generally be:

Question

Quizplus · Accepted Answer

If the resulting NPV is positive, it means the project is generating value above the cost of capital. Therefore, the cost of capital must be lower than the internal rate of return for the investment to be profitable. This makes option A the correct choice.

When Using the Net Present Value Technique to Evaluate the Quality