The NPV criterion states that an investment project is profitable when its NPV is ______ and unprofitable when its NPV is ______.
A) positive; positive
B) positive; negative
C) negative; positive
D) negative; negative

Question

Quizplus · Accepted Answer

The NPV criterion states that an investment project is profitable when its NPV is positive and unprofitable when its NPV is negative. Therefore, option B is the correct choice. Option A is incorrect because an NPV cannot be both positive and unprofitable at the same time. Option C is incorrect because a positive NPV indicates profitability while a negative NPV indicates unprofitability. Option D is incorrect because both negative NPV values indicate unprofitability.

The NPV Criterion States That an Investment Project Is Profitable