Which of the following is likely if a project with an NPV value of zero is accepted?
A)Shareholders are likely to receive more future wealth than if they had invested in another project.
B)The company is likely to make more money by accepting the project than if they had paid the available cash back to the shareholders.
C)Shareholders are likely to receive the same future wealth as they would have if they had invested elsewhere.
D)There will be insufficient funds to complete the project.

Question

Quizplus · Accepted Answer

If a project has an NPV of zero, it means that the expected cash inflows are equal to the initial investment cost. This indicates that the project is not expected to generate any additional wealth beyond what the shareholders could receive if they invested their money elsewhere. Therefore, shareholders are likely to receive the same future wealth as they would have if they had invested elsewhere.

Which of the Following Is Likely If a Project with an NPV