A firm is evaluating a project that has a net present value of $0 when a discount rate of 10% is used.A discount rate of 7% will result in a:

Question

Quizplus · Accepted Answer

A lower discount rate of 7% will result in a higher net present value (NPV) than the NPV calculated with a higher discount rate of 10%. Since the project has an NPV of $0 at a discount rate of 10%, it is likely that the lower discount rate of 7% will result in a positive NPV, hence option B is the correct answer.

A Firm Is Evaluating a Project That Has a Net