For capital budgeting purposes, an investment is acceptable if:
A)the present value of the expected net cash flows is positive.
B)net present value is positive.
C)the intrinsic value is greater than the current market price.
D)all of the above.

Question

Quizplus · Accepted Answer

All options describe scenarios where an investment would be considered acceptable for capital budgeting purposes. A) and B) are essentially stating the same principle using slightly different terms, where the investment is considered good if the present value of future cash flows (after accounting for the initial investment) is positive. C) suggests an investment is good if its calculated intrinsic value (based on expected future cash flows) is higher than what the market currently prices it at, indicating undervaluation.

For Capital Budgeting Purposes, an Investment Is Acceptable If