Projects with a negative net present value should be:
A) rejected as it does not take the time value of money into account.
B) rejected since the expected future cash flows from the project are less than the cost of the investment.
C) accepted since the net present value does not alter the company's capital budgeting.
D) accepted since the expected future cash flows from the project exceed the cost of the investment.

Question

Quizplus · Accepted Answer

Projects with a negative net present value indicate that the expected future cash flows from the project are less than the cost of the investment. This means that the project is not expected to generate enough revenue to cover its initial investment and is therefore not financially feasible. As a result, such projects should be rejected.

Projects with a Negative Net Present Value Should Be