If a Project's Expected Rate of Return Exceeds Its Opportunity

question 88

Multiple Choice

If a Project's expected rate of return exceeds its opportunity cost of capital, one would expect:

• A)the profitability index to exceed 1.0.
• B)the opportunity cost of capital to be too low.
• C)the IRR to exceed the opportunity cost of capital.
• D)the NPV to be zero.

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Definitions:

Genetic Vulnerability

An increased likelihood of developing certain diseases or conditions based on one's genetic makeup.

Schizophrenia

A chronic and severe mental disorder affecting how a person thinks, feels, and behaves, often leading to some loss of contact with reality.

Marijuana

A psychoactive drug derived from the Cannabis plant, used both recreationally and, in some jurisdictions, for medicinal purposes.

Impulsivity

The tendency to act on a whim, displaying behavior characterized by little or no forethought, reflection, or consideration of the consequences.