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:

Adenine

A purine nucleobase, one of the four building blocks of DNA and RNA, involved in cellular energy transfer and signaling.

Ribose

Ribose is a five-carbon sugar essential for the structure of RNA and plays a role in the synthesis of ATP, an energy-carrying molecule in cells.

DNA

Deoxyribonucleic acid, a molecule that contains the instructions an organism needs to develop, live, and reproduce, made up of two long strands forming a double helix.

Replication

In the context of molecular biology, replication refers to the process by which a cell duplicates its DNA, allowing genetic information to be passed on to the next generation of cells.