A Proposed Project Has a Positive NPV When Evaluated at the Company

question 7

Multiple Choice

A proposed project has a positive NPV when evaluated at the company cost of capital. If the firm employs debt in its capital structure, will the project remain acceptable after evaluation with the WACC?

• A) Yes, using the WACC will increase the NPV.
• B) No, using the WACC will decrease the NPV.
• C) The project may now become unacceptable.
• D)There will be no change in the project's NPV.

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Definitions:

Maslow's Hierarchy

A psychological theory proposed by Abraham Maslow that outlines a five-tier model of human needs, from basic physiological needs to self-actualization.

Abraham Maslow's Hierarchy

A theory in psychology, proposed by Abraham Maslow, which comprises a five-tier model of human needs, depicted as hierarchical levels within a pyramid.

Safety Needs

Fundamental requirements for security and protection from physical and emotional harm, as one of the levels in Maslow's hierarchy of needs.

Deficit Principle

A concept in motivation that suggests individuals are motivated to satisfy deprived needs, or deficits, to maintain a base level of comfort.