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

question 21

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:

Empathy

The ability to understand and share the feelings of another, an important component of emotional intelligence and interpersonal relationships.

Reflection

The act of giving serious thought or consideration to one's actions, beliefs, or life experiences, often leading to insights.

Authenticity

The quality of being genuine or true to one's own personality, spirit, or character.

Personalization

A cognitive distortion where an individual believes that events or situations are directly related to them, often attributing external occurrences to themselves without evidence.