A major corporation is considering a capital budgeting project that involves the development of a new technology.The controller estimates the net present value to be negative,yet argues that the company should invest in the project.Which of the following statements is MOST correct?

Question

Quizplus · Accepted Answer

The controller may be considering the option to expand or modify the project in the future. While negative NPV is generally seen as a signal to not invest, there may be other reasons for the controller to believe that the project is still worth investing in, such as potential for future growth or strategic benefits. Therefore, option B is the most correct choice. Options A, C, and D do not provide a plausible explanation for why the controller might argue for investing in a project with negative NPV.

A Major Corporation Is Considering a Capital Budgeting Project That