The ____ the MNC's cost of capital, the ____ will be a project's net present value for its proposed project with a given set of expected cash flows.
A) lower; higher
B) higher; higher
C) lower; lower
D) none of the above

Question

Quizplus · Accepted Answer

A lower cost of capital for the MNC means that the company can borrow money at a lower interest rate, which decreases the discount rate applied to the project's cash flows in order to calculate its net present value. This, in turn, increases the project's net present value. Thus, option A is the correct choice.

The ____ the MNC's Cost of Capital, the ____ Will

The the MNC's Cost of Capital, the Will