A project requires an initial outlay of $10 million.If the cost of capital exceeds the project IRR,then the project has a(n):
A) positive NPV.
B) negative NPV.
C) acceptable payback period.
D) positive profitability index.

Question

Quizplus · Accepted Answer

If the cost of capital exceeds the project IRR, it means that the project's expected rate of return is lower than the cost of financing it. This indicates that the project is not expected to generate enough profits to cover its costs, resulting in a negative NPV. Therefore, the best choice is B.

A Project Requires an Initial Outlay of $10 Million