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Which of the following statements is false? Projects that have an NPV of zero should be...

Which of the following statements is false?

Projects that have an NPV of zero should be rejected, as accepting them is equivalent to losing the present value of the projects' costs.

When you have many investment alternatives with positive NPVs, the one with the highest NPV should be selected.

Accepting positive NPV projects is equivalent to receiving their NPV in cash today.

One should reject projects that have a negative NPV, as not doing them has an NPV of zero.

None of the above.
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Answer #1

The Statement which is FALSE is :- Projects that have an NPV of zero should be rejected, as accepting them is equivalent to losing the present value of the projects' costs

( Explanation- Projects with zero NPV means that that the project is earning the same rate of return which is equal to discount factor which is employed to measure the NPV. It is a situation of no profit or no loss. So, if the company is fine with earning the rate of return which is same as discount factor then, company can go ahead with accepting the project. To conclude, the Projects with NPV=0 do not earn profits but add the revenue to the company.)

All other statements given are TRUE.

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