A firm can profitably purchase an asset if the asset's net present value is:

Question

Quizplus · Accepted Answer

A firm can profitably purchase an asset only if its net present value is positive. A positive NPV indicates that the expected cash inflows from the asset exceed the cost of acquiring and operating it, which means that the investment generates a return higher than the risk-adjusted discount rate. A negative NPV would indicate that the investment is expected to lose money, while an NPV of zero would imply that the investment generates neither profit nor loss, but simply breaks even.

A Firm Can Profitably Purchase an Asset If the Asset's