Question
Your company has established a hurdle rate, or cost of capital of 15% for new investment projects. You have just analyzed a new potential investment
Your company has established a hurdle rate, or cost of capital of 15% for new investment projects. You have just analyzed a new potential investment and it has a net present value of $0.00 (zero). What is the correct decision for your company?
| Not enough information to make this decision. | |
| Reject the project, because it does not earn at least 15%. | |
| The project at least meets the minimum criteria of 15% you may consider accepting the project, after evaluating other alternatives and other factors. | |
| Rework the cash flows (cook the books a little) to achieve a positive NPV. |
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Essentials Of Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
6th Edition
0073226386, 978-0073226385
