Which Statement Concerning the Net Present Value (NPV)of an Investment

question 71

Multiple Choice

Which statement concerning the net present value (NPV) of an investment or a financing project is correct?

• A)A financing project should be accepted if,and only if,the NPV is exactly equal to zero.
• B)An investment project should be accepted only if the NPV is equal to the initial cash flow.
• C)Any type of project should be accepted if the NPV is positive and rejected if it is negative.
• D)Any type of project with greater total cash inflows than total cash outflows,should always be accepted.
• E)An investment project that has positive cash flows for every time period after the initial investment should be accepted.

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Definitions:

Household Damage

Damage or harm caused to the structure, contents, or occupants of a house due to various factors such as accidents, natural disasters, or wear and tear.

Water Supply

The system or process involved in providing water to meet agricultural, residential, industrial, and all other needs of a population.

States of Nature

The different outcomes or future conditions that might occur in a decision-making scenario, over which the decision maker has no control.

Profit/Value

The financial gain, often the difference between the selling price and the cost of goods sold or the worth that is generated from an activity or investment.