The primary reason that a company's projects with positive net present values are considered acceptable is that:
A)the required cash inflows exceed the actual cash inflows.
B)they return the initial cash outlay within three years or less.
C)the project's rate of return exceeds the rate of inflation.
D)they create value for the owners of the firm.
E)the investment's cost exceeds the present value of the cash inflows.

Question

Quizplus · Accepted Answer

The primary reason that a company's projects with positive net present values are considered acceptable is that they create value for the owners of the firm. Positive net present values mean that the present value of the project's cash inflows exceeds the initial cash outlay, which adds value to the firm and benefits its owners.

The Primary Reason That a Company's Projects with Positive Net