If the opportunity cost of capital for a project exceeds the Project's IRR, then the project has a(n):
A)positive NPV.
B)negative NPV.
C)acceptable payback period.
D)positive profitability index.

Question

Quizplus · Accepted Answer

If the opportunity cost of capital for a project exceeds the Project's IRR, then the project's NPV will be negative. This is because the IRR represents the project's own rate of return, and if the opportunity cost of capital is higher than that, then the project is not as profitable as investing the same money elsewhere. Therefore, the project has a negative NPV and is not a good investment.

If the Opportunity Cost of Capital for a Project Exceeds