Author Question: Your firm is evaluating a potential investment in new machinery, but the manager in charge of the ... (Read 77 times)

geoffrey

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Your firm is evaluating a potential investment in new machinery, but the manager in charge of the project uses an opportunity cost of capital that is too large. How does this error affect the projected net present value of the firm's investment?
 
  A) NPV is overstated
  B) NPV is understated
  C) NPV is unaffected
  D) NPV changes from positive to negative

Question 2

College graduates will earn over 1,000,000 more on average than high school dropouts before retiring.
 
  Indicate whether the statement is true or false



macagnavarro

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Answer to Question 1

B

Answer to Question 2

T



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