If the net present value (NPV)of project A is +$100 and that of project B is +$60, then the net present value of the combined projects is
A)+$100.
B)+$60.
C)+$160.
D)+$6,000.

Question

Quizplus · Accepted Answer

To find the NPV of the combined projects, we simply add the NPV of project A to the NPV of project B. Therefore, NPV of combined projects is +$160. Project A has a higher NPV than project B, making it a better choice individually. However, if we can invest in both A and B, the combined NPV is even higher than A alone, making the choice of both A and B together the best option.

If the Net Present Value (NPV)of Project a Is +$100