Question

If the project’s weighted average cost of capital (WACC) is 8%, the project’s NPV (rounded to the nearest dollar) is:

a) Yields (yield) a positive NPV.

b) Produces (produce) a negative NPV.

c) Results (result) in a neutral NPV.

d) Affects (affect) the project's cash flow.

Answer 1

The NPV of a project with a WACC of 8% can yield a positive or negative result.

Step-by-step explanation:

The question asks about the net present value (NPV) of a project given its weighted average cost of capital (WACC) of 8%. The NPV represents the difference between the present value of cash inflows and outflows of a project. If the WACC is 8% and the NPV is positive, it means that the project is generating more cash inflows than outflows and is considered a good investment. If the NPV is negative, it means that the project is generating more cash outflows than inflows and may not be a good investment. In this case, since the WACC is 8% and it is not specified whether the NPV is positive or negative, we cannot determine the exact result.