Suppose you determine that the NPV of a project is $1,525,855.What does that mean?
A)In all cases,investing in this project would be better than investing in a project that has an NPV of $850,000.
B)The project would add value to the firm.
C)Under all conditions,the project's payback would be less than the profitability index.
D)Other investment criteria might need to be considered.

Question

Quizplus · Accepted Answer

The NPV of $1,525,855 implies that the project would add value to the firm. A positive NPV indicates that the project's expected cash inflows are greater than its initial cost of investment, which increases the firm's overall value. Other investment criteria such as payback period, profitability index, or internal rate of return might also be considered to make a more comprehensive evaluation of the project's potential.

Suppose You Determine That the NPV of a Project Is