To state that financing at current market terms is a zero-NPV transaction indicates that:
A) firms should avoid these methods of financing.
B) there is no cost involved in the financing.
C) the market has not set financing terms correctly.
D) there are no "bargains" when financing at current terms.

Question

Quizplus · Accepted Answer

A zero-NPV transaction implies that the financing is fairly priced, meaning there are no undervalued or overvalued opportunities, hence no "bargains" exist.

To State That Financing at Current Market Terms Is a Zero-NPV