Accepting positive NPV projects benefits the shareholders because:
A)it is the most easily understood valuation process.
B)the present value of the expected cash flows are equal to the cost.
C)the present value of the expected cash flows are greater than the cost.
D)it is the most easily calculated.
E)None of the above.

Question

Quizplus · Accepted Answer

Accepting positive NPV projects means that the present value of the expected cash flows is greater than the cost. This benefits shareholders because it increases the value of the company and potentially leads to higher future profits and dividend payments. Option A, B, D are incorrect as they do not accurately describe the benefit of accepting positive NPV projects.

Accepting Positive NPV Projects Benefits the Shareholders Because