Question

Choose the most accurate statement regarding the net present value of an investment or

a financing project:

A) A financing project should be accepted if, and only if, the NPV is exactly equal to zero.

B) An investment project should be accepted only if the NPV is equal to the initial cash

flow.

C)Any type of project should be accepted if the NPV is positive and rejected if it is negative

D) An investment project that has positive cash flows for every time period after the initial

investment should be accepted.

Answer #2

A project or investment should he selected of the NPV of the project is positive. NPV is calculated by discounting the cash flows at a discount rate. Hence, if the NPV is positive, it is going to add value to the firm and should be selected. Hence,

the most accurate statement regarding the net present value of an investment or a financing project-

**C**) **Any type of project should be
accepted if the NPV is positive and rejected if it is
negative.**

*Do let me know in the comment section in case of any
doubt.*

answered by: anonymous

11.
The discount rate that makes the net present value of an
investment exactly equal to zero is the:
A)
Payback period.
B)
Internal rate of return.
C)
Average accounting return.
D)
Profitability index.
E)
Discounted payback period.
12.
The internal rate of return (IRR) rule can be best stated
as:
A)
An investment is acceptable if its IRR is exactly equal to its
net present value (NPV).
B)
An investment is acceptable if its IRR is exactly equal to...

The
NPV rule states that, “An investment should be accepted if the net
present value ( NPV) is positive and rejected if it is negative.”
What does an NPV of zero mean? If you were a decision-maker faced
with a project with a zero NPV ( or very close to zero) what would
you do? Why?

Choose a wrong statement regarding
capital budgeting.
① For a business project with a
negative net present value (NPV), its internal rate of
return (IRR) must be lower than the
weighted average cost of capital (WACC)
used to evaluate the project.
② Because the NPV and IRR of mutually
exclusive projects can give opposite results,
entirely depending on the IRR method to
choose a business project can minimize
the risk of misjudgment.
③ The big difference between the NPV
and...

If a project has a net present value equal to zero, then:
Group of answer choices the project earns a return exactly equal
to the discount rate.
the total of the cash inflows must equal the initial cost of the
project.
a decrease in the project's initial cost will cause the project
to have a negative NPV.
any delay in receiving the projected cash inflows will cause the
project to have a positive NPV.
the project's PI must be also...

An investment costs $200,000. If the present value (PV) of all
the future cash flows is $175,000, which of the following
statements is correct?
a.
The project should be rejected since the Profitability Index is
less than 1.
b.
The project should be rejected since the NPV is $25,000.
c.
The project should be accepted since the Profitability Index is
greater than 0
d.
The project should be rejected since the NPV is -$175,000.

2. Net present value (NPV)
Evaluating cash flows with the NPV method
The net present value (NPV) rule is considered one of the most
common and preferred criteria that generally lead to good
investment decisions.
Consider the case of Lumbering Ox Truckmakers:
Suppose Lumbering Ox Truckmakers is evaluating a proposed
capital budgeting project (project Alpha) that will require an
initial investment of $400,000. The project is expected to generate
the following net cash flows:
Year
Cash Flow
Year 1
$375,000...

1. Net present value (NPV)
Evaluating cash flows with the NPV method
The net present value (NPV) rule is considered one of the most
common and preferred criteria that generally lead to good
investment decisions.
Consider this case:
Suppose Black Sheep Broadcasting Company is evaluating a
proposed capital budgeting project (project Alpha) that will
require an initial investment of $450,000. The project is expected
to generate the following net cash flows:
Year
Cash Flow
Year 1
$275,000
Year 2
$500,000...

Net present value (NPV)
Evaluating cash flows with the NPV method
The net present value (NPV) rule is considered one of the most
common and preferred criteria that generally lead to good
investment decisions.
Consider this case:
Suppose Hungry Whale Electronics is evaluating a proposed
capital budgeting project (project Alpha) that will require an
initial investment of $400,000. The project is expected to generate
the following net cash flows:
Year
Cash Flow
Year 1
$325,000
Year 2
$400,000
Year 3...

1. Net present value (NPV)
Evaluating cash flows with the NPV method
The net present value (NPV) rule is considered one of the most
common and preferred criteria that generally lead to good
investment decisions.
Consider this case:
Suppose Happy Dog Soap Company is evaluating a proposed capital
budgeting project (project Alpha) that will require an initial
investment of $400,000. The project is expected to generate the
following net cash flows:
Year
Cash Flow
Year 1
$375,000
Year 2
$400,000...

Net present value (NPV)
Evaluating cash flows with the NPV method
The net present value (NPV) rule is considered one of the most
common and preferred criteria that generally lead to good
investment decisions.
Consider this case:
Suppose Happy Dog Soap Company is evaluating a proposed capital
budgeting project (project Alpha) that will require an initial
investment of $450,000. The project is expected to generate the
following net cash flows:
Year
Cash Flow
Year 1
$300,000
Year 2
$475,000
Year...

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