The NPV Criterion States That an Investment Project Is Profitable

question 6

Multiple Choice

The NPV criterion states that an investment project is profitable when its NPV is ______ and unprofitable when its NPV is ______.

• A) positive; positive
• B) positive; negative
• C) negative; positive
• D) negative; negative

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Definitions:

Long-term Goals

Objectives or plans that are intended to be achieved over an extended period, typically exceeding one year.

Fixed Asset

Long-term tangible assets that are used in the operations of a business and are not expected to be consumed or converted into cash within a year.

Useful Life

The period over which an asset is expected to be used by an entity, or its lifespan for accounting purposes.

Residual Value

The estimated value of a fixed asset at the end of its useful life.