The discount rate that will result in the highest net present value for a project is
A) any rate lower that the cost of capital.
B) any rate higher than the cost of capital.
C) the lowest rate used to evaluate the project.
D) the highest rate used to evaluate the project.

Question

Quizplus · Accepted Answer

The discount rate that results in the highest net present value (NPV) for a project is the lowest rate used to evaluate the project. This is because a lower discount rate reduces the present value of future cash outflows more modestly, thereby increasing the NPV.

The Discount Rate That Will Result in the Highest Net