You are the advisor to the board of trustees of a for-profit university that is considering expanding its current facilities. The board shows you the graph below that was provided by a consulting firm showing the NPV profile if the current facilities are expanded The board has been told by the consulting firm that since the IRR is approximately 9%, the expansion should be undertaken as long as the university's cost of capital is less than 9%. What would be your recommendation be the board?

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NPU 10 -10 -20 -30 10 15 20 Discount Rate (*) NPU 10 -10 -20 -30 10 15 20 Discount Rate (*)

Answer rating: 100% (QA)

Recommendation to the Board of Trustees Based on the NPV profile provided by the consulting firm I would recommend that the Board of Trustees proceed ... View the full answer