If a Project Has a Net Present Value Equal to Zero,then

question 84

Multiple Choice

If a project has a net present value equal to zero,then:

• A)the total of the cash inflows must equal the initial cost of the project.
• B)the project earns a return exactly equal to the discount rate.
• C)a decrease in the project's initial cost will cause the project to have a negative NPV.
• D)any delay in receiving the projected cash inflows will cause the project to have a positive NPV.
• E)the project's PI must be also be equal to zero.

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Definitions:

Growth Oriented Firms

Companies that prioritize reinvestment of earnings into the business to drive sales and profit growth, often at the expense of short-term dividends.

Nonpayment of Dividends

The failure of a corporation to distribute earned profits to its shareholders at expected times.

Flotation Costs

The costs incurred by a company when issuing new securities, including underwriting, legal, and registration fees.

Positive Effect

A beneficial or favorable outcome or impact of a particular event, action, or policy.