The NPV of an investment proposal becomes negative solely as a result of allocating a portion of the corporation president's salary.It is most likely the case that:
A) the project should be accepted.
B) rejecting the project is the correct decision.
C) the allocation should be postponed until the project is accepted.
D) the salary should be considered an opportunity cost of the project.

Question

Quizplus · Accepted Answer

The allocation of the president's salary is likely a fixed cost that does not change with the project. Therefore, it should not affect the decision to accept or reject the project based on NPV.

The NPV of an Investment Proposal Becomes Negative Solely as a Result