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A project with a positive net present value at the company's discount rate

  • A.earns more than that rate and is worth doing
  • B.earns exactly that rate and is marginal
  • C.earns less than that rate and should be rejected
  • D.cannot be assessed without its payback period

Answer: A

The discount rate already represents the return the money could earn elsewhere, so beating it is the test of worth. A negative value does not mean the project loses money, only that it earns less than the alternative use of the capital.

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