If a project costs $600 today and returns $630 next year, the highest interest rate at which the project should still be undertaken is five percent.

Name: If a project costs $600 today and returns $630 next year, the highest interest rate at which the project should still be undertaken is five percent.
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Question

Quizplus · Accepted Answer

The project's return is $630/$600 = 1.05, which is a 5% return. If the interest rate is 5% or lower, the project breaks even or is profitable.

If a Project Costs $600 Today and Returns $630 Next