If the net present value of an investment project is positive,then the project is ________.If the net present value of an investment project is negative,then the project is ________.
A) ignored; accepted
B) desirable; undesirable
C) unacceptable; acceptable
D) rejected; accepted

Question

Quizplus · Accepted Answer

If the net present value (NPV) of an investment project is positive, it means the project is desirable as it will generate more cash inflows than outflows and will increase the value of the firm. On the other hand, if the NPV is negative, it means the project is undesirable as it will generate less cash inflows compared to outflows and will decrease the value of the firm. Therefore, the best choice is B - desirable for positive NPV and undesirable for negative NPV.

If the Net Present Value of an Investment Project Is