If changing discount rates from the company cost of capital to the project cost of capital changes NPV from negative to positive,then the project should use the:

Question

Quizplus · Accepted Answer

If changing the discount rate from the company cost of capital to the project cost of capital changes NPV from negative to positive, it means the project has a positive NPV when evaluated using its own cost of capital. Therefore, the project cost of capital should be used and the project should be accepted.

If Changing Discount Rates from the Company Cost of Capital