Analysts at Tabby Fur Storage predict that the net present value of a proposed new $10 million warehouse is $1 million.How should these findings be interpreted?
A) Although NPV is positive, its value is too low for such a large expenditure and as a result, the project should be rejected.
B) The project should be rejected because the NPV is less than the cost of the warehouse.
C) The project should be accepted because it will add value to the firm.
D) More information such as the payback period should be evaluated since the reliance on only one capital budgeting technique should be discouraged.
E) The project does not meet the acceptance criteria of the NPV method and should be rejected.

Question

Quizplus · Accepted Answer

If a project will add value to a firm, it should be accepted.

Analysts at Tabby Fur Storage Predict That the Net Present