An investment option is profitable if its ________.

Question

Quizplus · Accepted Answer

A profitable investment option should have a net present value that is greater than zero. This means that the expected cash inflows from the investment are greater than the initial cost of the investment, taking into account the time value of money. An investment with a net present value of zero would only break even, while an investment with a negative net present value would result in a loss. A negative present value also indicates that the investment is not profitable as it implies the initial cost is higher than the present value of expected cash flows.

An Investment Option Is Profitable If Its ________