Question

An NPV profile plots a project's NPV at various costs of capital. A project's NPV profile is shown as follows. Identify the range of costs of capital that a firm would use to accept and reject this project. NPV (Dollars) 0 2 4 6 8 10 12 14 16 18 20 COST OF CAPITAL (Percent) This NPV profile demonstrates that as the cost of capital increases, the project's NPV

Answer 1

Hello Sir/ Mam

Range of capital with decisions:

Cost of Capital	Decision
Upto 12%	Accept
More than 12%	Reject

Green Region : Accept

Purple Region : Reject/ Decline

The NPV Profile demonstrates that as the CoC increases, the project's NPV decreases

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