The investment rule states that you should invest in a project as long as:

Question

Quizplus · Accepted Answer

The investment rule is based on the principle of time value of money. In other words, the economic cost we incur today should be less than or equal to the present value of the future payments for the project. This means that the returns we receive from the project in the future should be higher than the cost incurred today, in present value terms. Options A and D are incorrect because they don't consider the present value of future payments. Option B is irrelevant to the investment rule.

The Investment Rule States That You Should Invest in a Project