If the Net Present Value of a Proposed Investment Is

question 7

Multiple Choice

If the net present value of a proposed investment is positive,

• A) the firm should not make the investment because the initial outlay of the investment exceeds the present value of the cash flows discounted at the rate of return required to satisfy the firm's investors.
• B) the investment does not earn the rate of return required to satisfy the firm's investors.
• C) the present value of future cash flows would be unaffected by the proposed investment.
• D) the firm should make the investment because the present value of future cash flows discounted at the rate of return required to satisfy the firm's investors exceeds the initial outlay of the investment.

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