As the opportunity cost of capital decreases,the net present value of a project increases.

Name: As the opportunity cost of capital decreases,the net present value of a project increases.
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Question

Quizplus · Accepted Answer

This statement is true. When opportunity cost (i.e. the cost of forgoing other investment options to invest in a certain project) decreases, the discount rate used in calculating net present value also decreases. As a result, the net present value of a project increases.

As the Opportunity Cost of Capital Decreases,the Net Present Value