Posted on by Judy

the cost of capital measurement helps determine the value of a capital investment, but a positive NPV investment should not be rejected if it returns less than its cost of capital as long as it returns a positive net value. True or False

Net Present Value ( NPV) indicates present value of all investments ( outflow ) and cash inflows after discounting them with appropriate discounting rate. A positive cash flow i.e. a positive NPV is must for a project to qualify for investment. Thus it is “Necessary” condition , but not “Sufficient” condition for investment.)
However the positive cash flow generated must be sufficient enough to cover cost of Equity as well as cost of debt ( in terms of interest payable. The weighted average of cost of equity and cost of debt is called Cost of Capital. Thus it is must that the amount of cash generated through a positive NPV must be sufficient enough to cover cost of capital of the project , otherwise the project will be unviable in the long run.
Therefore it is FALSE to state that a “Positive NPV investment should not be rejected if it returns less than its cost of capital as long as it returns a positive net value.
ANSWER : FALSE
 
“Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!”

What Students Are Saying About Us

.......... Customer ID: 12*** | Rating: ⭐⭐⭐⭐⭐
"Honestly, I was afraid to send my paper to you, but splendidwritings.com proved they are a trustworthy service. My essay was done in less than a day, and I received a brilliant piece. I didn’t even believe it was my essay at first 🙂 Great job, thank you!"

.......... Customer ID: 14***| Rating: ⭐⭐⭐⭐⭐
"The company has some nice prices and good content. I ordered a term paper here and got a very good one. I'll keep ordering from this website."

"Order a Custom Paper on Similar Assignment! No Plagiarism! Enjoy 20% Discount"

Related posts:

  1. A company would like to invest in a project. The investment cost are $100,000 at the beginning of the first period, $75,000 more athe bigging of the third period, and $80,000 more at the beginning of the fourth period. The project has a 10-period useful life. The ash inflows at the end of period 4 through 10 are $20,000, $60,000, $80,000, $90,000, $120,000. $150,000, and $200,000, respectively. The cost of capital in period 1 through period 10 is 11%. The net present value of the project is $ __________. Please show me how to calculate the periods step by step.
  2. The most powerful of the five competitive forces is the rivalry amongst current competitors within the industry. Select one: O True False In Covey’s view, the most effective way to “begin with the end in mind is to develop a personal mission statement, which must begin at the very center of our Circle of Influence, that center comprised of our most basic paradigms, the lens through which we see the world. Developing a personal vision or mission statement, of course, has little in common with the process of developing a corporate vision or mission statement. Select one: True False The primay purpose of conducting an external audit or assessment is to identify the opportunities and threats facing the organization, so that it can develop strategies to take advantage of the opportunities and avoid or reduce the threats. Select one: O True O False
  3. For most organizations, there is a vast amount of information available in the public domain that can be gathered on them. The trick is to get the “right” information and to interpret it effectively. According to Porter, the “right information in good industry analysis is to assess the underlying drivers of each of the five competitive forces to determine which forces are strong and which are weak and why. Select one: O True O False U.S. and foreign governments’ regulations set “the rules of the game” in which organizational formulate and implement srategy. Governments directly impact the key opportunities and threats. Select one: True O False The two main parts of any external assessment are 1) to scan the larger environment or societal context for the organization and 2) to analyze the organization’s industry so that the organization’s competitive situation can be understood. Select one: True False
  4. Write a method named isValidPassword that takes a string as input parameter, and returns true if that string represents a valid password, or false otherwise.