You have been analyzing a project It would require an investment of $$10$ milion and produce positive cashflows for $10$ years Based upon the characteristics of this project, you used a cost of capital of r$=12\%.$ Applying the NPV Cntena, you decided to accept the project When presenting the results to your manager, she informs you that you should have used $8\%$ as the cost of capital. Does this affect your investment decision?

Yes decreasing the cost of capital increases the NPV

No$,$ decreasing the cost of capital increases the NPV

Yes decreasing the cost of capital decreases the NPV

No decreasing the cost of capital decreases the NPV

Later, your manager points out to you that if you do this project, you will use debt to finance the project Does this affect your investment decision?

Yes. Now you need to see if the NPV of the project is worth shopping around banks

No All secunty transactions are zero NPV so you can separate investment and financing

Yes The borrower is slave to the lender NEVER USE DEBT!

No Debt capital is cheaper than equity capital, so it increases your NP