If a project's net benefit computed on a present value basis-that is, NPV-is positive, then:

Question

Quizplus · Accepted Answer

A project with a positive NPV is considered an acceptable investment because it generates more cash flows than the initial investment and is expected to increase shareholder value. The internal rate of return (IRR) may be greater, equal to, or less than the required rate of return, and it does not necessarily mean the project is risk-free. The required rate of return is attainable if the project's cash flows exceed the investment's cost, as indicated by the positive NPV. The payback period is not relevant to the NPV analysis.

If a Project's Net Benefit Computed on a Present Value