The ____________ the cost of capital,the ___________ will be a project's net present value for a project with a given set of expected cash flows.
A) lower;higher
B) higher;higher
C) lower;lower
D) none of the above

Question

Quizplus · Accepted Answer

The lower the cost of capital, the higher the net present value (NPV) of a project will be. This is because a lower cost of capital means that the project's expected cash flows are discounted at a lower rate, resulting in a higher present value of those cash flows. Conversely, a higher cost of capital will result in a lower present value for the same set of cash flows, thereby lowering the project's NPV. Therefore, the best choice is A.

The ____________ the Cost of Capital,the ___________ Will Be a Project's

The __ the Cost of Capital,the _ Will Be a Project's