Which of the following best describes the Net Present Value rule?
A) Take any investment opportunity where the net present value (NPV) is not negative; turn down any opportunity when it is negative.
B) Take any investment opportunity where the net present value (NPV) exceeds the opportunity cost of capital; turn down any opportunity where the cost of capital exceeds the net present value (NPV).
C) When choosing among any list of investment opportunities where resources are limited, always choose those projects with the highest net present value (NPV).
D) If the difference between the present cost of an investment and the present value (PV) of its benefits after a fixed number of years is positive the investment should be taken, otherwise it should be rejected.

Question

Quizplus · Accepted Answer

The Net Present Value rule suggests accepting any investment opportunity where the NPV is positive (or not negative) and rejecting any with a negative NPV, as it indicates the project is expected to generate a return above the cost of capital.

Which of the Following Best Describes the Net Present Value