A project's cost of capital is 10%. Which of the following would lead to its acceptance?

Question

Quizplus · Accepted Answer

An NPV of $2,000 indicates that the project's present value of cash inflows exceeds its present value of cash outflows by $2,000, which would create value for the company and provide a return greater than the cost of capital. A project with an IRR of 10% would be acceptable, but it's not the best choice because it only meets the cost of capital, rather than exceeding it. An NPV of ($2,000) indicates that the project would decrease the value of the company, so it would not be accepted. And an IRR of 8% is less than the cost of capital, so the project would not provide an adequate return and would not be accepted.

A Project's Cost of Capital Is 10