In order for a manager to correctly decide to postpone an investment until one year into the future, the NPV of the investment should:
A)grow more rapidly than the IRR.
B)grow more rapidly than the cost of capital.
C)not decrease.
D)remain stable.

Question

Quizplus · Accepted Answer

The correct decision to postpone an investment until one year into the future is when the NPV (Net Present Value) of the investment is expected to grow more rapidly than the cost of capital. This indicates that waiting will potentially yield a higher return than the current cost of investing the capital elsewhere.

In Order for a Manager to Correctly Decide to Postpone