A project is accepted under the net present value method when

Question

Quizplus · Accepted Answer

According to the net present value method, a project is accepted only if the purchase price of the asset is less than the present value of net cash inflows. This means that the total net cash inflows may not necessarily exceed the purchase price, but the present value of those cash inflows should at least justify the cost of the project. Therefore, option C is the correct answer. The other options do not accurately reflect the net present value method. Option A refers to the minimum required rate of return, which is used in the calculation of the net present value, but is not a criteria for acceptance. Option B refers to the payback period method, which is different from the net present value method. Option D is vague and not specific to the net present value method.

A Project Is Accepted Under the Net Present Value Method