Question

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

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.

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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
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