A company that can build a project that will cost $50,000,but returns $52,000 in one year would make a good decision turning this project down if the interest rate were 3 percent.

Question

Quizplus · Accepted Answer

The project has a positive net present value (NPV) of $2,000 at a 3% interest rate. Therefore, the company should accept the project as it is expected to provide a return greater than the cost of capital.

A Company That Can Build a Project That Will Cost