The value additivity principle indicates that, when a firm undertakes an independent project, the value of the firm is increased by the from the project.
A)present value of the cash inflows
B)sum of the cash inflows and outflows
C)net present value
D)none of these

Question

Quizplus · Accepted Answer

The value additivity principle states that the value of a firm increases by the net present value (NPV) of an independent project, as NPV accounts for both inflows and outflows.

The Value Additivity Principle Indicates That, When a Firm Undertakes