Net Present Value (NPV) Is Interpreted Using the Following Decision

question 26

Multiple Choice

Net present value (NPV) is interpreted using the following decision rule: The investor will purchase the property as long as the NPV is:

• A) greater than zero
• B) equal to zero
• C) less than zero
• D) equal to the opportunity cost of investment

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Definitions:

Internally Generated

Refers to assets, benefits, or revenues produced within a company through its own processes and activities.

Identifiable Intangibles

Non-monetary assets without physical substance, which can be separated from a company and sold, transferred, licensed, rented, or exchanged.

Intangible Assets

Assets that lack physical substance, like copyrights, patents, trademarks, and goodwill.

Physical Substance

A characteristic referring to the tangible nature of an asset, implying it has a material existence.