A Project with a Higher Than Average Risk Offers an Expected

question 57

Multiple Choice

A project with a higher than average risk offers an expected return of 18%.Which statement is correct if the company's opportunity cost of capital is 12% and the project's opportunity cost of capital is 15%?

• A)Project NPV is positive; it should be accepted.
• B)Project NPV is negative; it should be rejected.
• C)Project NPV is positive but it should be rejected.
• D)Project NPV is negative but it should be accepted.

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Definitions:

Elitist

Pertaining to a belief or attitude that a select group of people with a certain ancestry, intrinsic quality, high intellect, wealth, or who have specific, desirable affiliations are entitled to lead or enjoy special status.

Anti-democratic

Opposed to democratic principles, often favoring centralized control or leadership without the same level of input or influence from the general population.

Upper-management Levels

The highest tier in an organization's management hierarchy, responsible for strategic decision-making and company-wide policy setting.

Conceptual Clarity

The state of having a clear and coherent understanding of an idea or concept, free from confusion or ambiguity.