If the net present value of a project is greater than zero,the firm will earn a return greater than its cost of capital.The acceptance of such a project would enhance the wealth of the firm's owners.

Question

Quizplus · Accepted Answer

A positive net present value indicates that the project's expected cash inflows are greater than its initial investment, which means that the firm will earn a return greater than its cost of capital. Therefore, the acceptance of such a project would enhance the wealth of the firm's owners.

If the Net Present Value of a Project Is Greater