When a Project's Net Present Value (NPV) Exceeds Zero, Then

question 145

Multiple Choice

When a project's net present value (NPV) exceeds zero, then:

• A) the project should be accepted
• B) the project will be acceptable using the payback period method
• C) the IRR should be calculated to ensure that the project's IRR exceeds the cost of capital
• D) the payback period is always less than one year

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Definitions:

Marginal Cost

The augmentation in cost due to the manufacture of one additional unit of a product or service.

Total Variable Cost

The sum of all costs that vary with the level of output, including materials and labor directly involved in production.

Output

The quantity of goods or services produced in a given period by a firm, industry, or country.

Total Cost

The combined amount of all expenses and costs associated with the production and sale of a good or service.