In order to generate a positive NPV project, a firm must have an economic advantage over its competitors.

Question

Quizplus · Accepted Answer

A positive NPV indicates that the project is generating returns higher than the required rate of return. This can only happen if the firm has an economic advantage or competitive edge over its rivals, which allows it to earn more profits or minimize costs. Without such an advantage, the project's returns would not be sufficient to surpass the opportunity cost of capital, resulting in a negative NPV.

In Order to Generate a Positive NPV Project, a Firm