A Proposed Project Has a Positive NPV If It Is

question 5

Multiple Choice

A proposed project has a positive NPV if it is financed entirely by equity.If the project can sensibly be financed partly by debt and the firm pays tax,will the project remain acceptable?

• A) Yes, using debt will increase the NPV.
• B) No, using debt 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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