According to the NPV rule, all projects should be accepted if NPV is positive when discounted at the:
A)Internal rate of return
B)Opportunity cost of capital
C)risk-free interest rate
D)Accounting rate of return

Question

Quizplus · Accepted Answer

The NPV rule states that a project should be accepted if its NPV is positive when discounted at the opportunity cost of capital. This is because the opportunity cost of capital represents the required rate of return for investing in the project, taking into account the risk of the project and the returns available in other investments of similar risk. Discounting the cash flows at the opportunity cost of capital allows for a fair comparison of the project's returns to other investment opportunities. Therefore, choice B is the best answer.

According to the NPV Rule, All Projects Should Be Accepted