If the net-present-value of an investment is positive,which of the following is not true?

Question

Quizplus · Accepted Answer

If the net-present-value of an investment is positive, it means that the expected return is greater than the cost of capital, which implies that choice B is true. Choice A is also true because a positive NPV implies that the investment is profitable and should be accepted. Choice D may or may not be true because the maximum price the firm is willing to pay could be higher or lower than the cost of the asset. However, choice C is not true because the hurdle rate is the minimum expected return that the investment must meet to be acceptable. If the NPV is positive, it means that the investment earns more than the hurdle rate, not less.

If the Net-Present-Value of an Investment Is Positive,which of the Following