If a project promises to generate a higher rate of return than the firm's cost of capital, accepting the project will:
A) increase ROI.
B) decrease ROI.
C) increase payback.
D)decrease payback.

Question

Quizplus · Accepted Answer

Accepting a project that promises to generate a higher rate of return than the firm's cost of capital will increase ROI (return on investment). This means that the firm can generate more profit per dollar invested in the project than it would by investing that same dollar elsewhere. It is therefore a wise decision to accept such a project, as it will increase the overall profitability of the firm.

If a Project Promises to Generate a Higher Rate of Return