A firm would accept a project with a net present value of zero because
A) the return on the project would be zero.
B) the project would maintain the wealth of the firm's owners.
C) the project would enhance the wealth of the firm's owners.
D) the return on the project would be positive.

Question

Quizplus · Accepted Answer

A project with a net present value of zero means that the cash inflows from the project are equal to the cash outflows, resulting in no gain or loss. However, it can still maintain the wealth of the firm's owners if it helps to sustain the current operations or prevent any losses. Therefore, a firm may accept a project with a net present value of zero to maintain the status quo and not necessarily to enhance the wealth of the owners.

A Firm Would Accept a Project with a Net Present