An investment should be undertaken if the present value of an expected stream of earnings from the investment exceeds the cost of the investment necessary to undertake it.

Question

Quizplus · Accepted Answer

This statement is true because the fundamental principle of investment decision-making is that an investment is considered worthwhile if the present value of its expected future earnings (or cash flows) exceeds the initial cost required to make the investment. This ensures that the investment will generate a positive net present value, indicating profitability.

An Investment Should Be Undertaken If the Present Value of an Expected