A project should be accepted as long as:
A) the present value of the expected net receipts it generates equals or exceeds its price the net outlay required).
B) the present value of the expected net receipts it generates is less than its price the net outlay required).
C) its NPV is greater than zero.
D) its NPV is less than zero.
E) its IRR is less than the cost of capital.

Question

Quizplus · Accepted Answer

A project should be accepted if the present value of the expected net receipts it generates equals or exceeds its price (the net outlay required). This ensures that the project will provide a positive net present value (NPV) and a return on investment that is greater than the cost of capital. B and D are incorrect because the present value of expected net receipts should be greater than the price and the NPV should be positive, respectively. C is a correct statement, but it does not specify the exact threshold for the NPV. E is incorrect because the IRR should be greater than the cost of capital for a project to be accepted.

A Project Should Be Accepted as Long As