If a firm finds that the net present value of a project is _____ for a given interest rate, it will _____ the project.
A) positive; undertake
B) positive; not undertake
C) negative; undertake
D) positive or negative; undertake
Answer Key

Question

Quizplus · Accepted Answer

A positive net present value indicates that the project is expected to generate more cash flows than the cost of the investment, creating value for the firm. Therefore, the firm would undertake the project to capitalize on this value.

If a Firm Finds That the Net Present Value of a Project