Use the table for the question(s)below.
-If the risk-free interest rate is 10%,then of the four projects listed,which project would you never want to invest in?
A)Eenie
B)Meenie
C)Mighty
D)Moe

Question

Use the table for the question(s)below. 
-If the risk-free interest rate is 10%,then of the four projects listed,which project would you never want to invest in?
A)Eenie 
B)Meenie 
C)Mighty 
D)Moe

Quizplus · Accepted Answer

The project with the lowest net present value (NPV) at a 10% discount rate is project D, indicating that it would not generate enough cash flows to cover the cost of capital. Therefore, it would not be a good investment. Projects Eenie, Meenie, and Mighty all have positive NPVs at a 10% discount rate, indicating that they would generate more cash flows than the cost of capital and would be good investment choices.

Use the Table for the Question(s)below