In Computing the Net Present Value of a Project, a Manager

question 54

Multiple Choice

In computing the net present value of a project, a manager uses a cost of capital number that is too low. This error causes the manager to compute a net present value that:

• A)is lower that what it in fact should be.
• B)is higher that what it in fact should be.
• C)has no effect on the net present value computation.
• D)is undefined in mathematical terms.