A capital investment has a net present value of $1,000.00 at a required rate of

Question

A capital investment has a net present value of $1,000.00 at a required rate of return of 10%. At a 12% required rate of return, the net present value of the investment is $100.00. At a 14% required rate of return, the net present value of the investment is $0. The capital investment should be rejected if ________. SHOW WORK A. the required rate of return exceeds 14% B. the required rate of return is less than 12% C. the required rate of return is less than 14% D. the required rate of return exceeds 12%

Explanation / Answer

NPV 1000 100 0 required rate of return 10% 12% 14% A. required rate of return exceeds 14% as the NPV would be negative

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