The profitability of an investment project will decrease if

Question

Quizplus · Accepted Answer

An increase in real interest rates means that an investor will have a higher opportunity cost for their money, and they will require a higher return on investment to justify the risk. This will decrease the profitability of an investment project. A decrease in tax rates or increase in business tax deductions may have a positive impact on profitability, but these factors alone cannot determine the overall profitability of an investment project.

The Profitability of an Investment Project Will Decrease If