Which of the Following Best Describes the Net Present Value

question 106

Multiple Choice

Which of the following best describes the Net Present Value rule?

• A)Take any investment opportunity where the net present value (NPV)is not negative; turn down any opportunity when it is negative.
• B)Take any investment opportunity where the net present value (NPV)exceeds the opportunity cost of capital; turn down any opportunity where the cost of capital exceeds the net present value (NPV).
• C)When choosing among any list of investment opportunities where resources are limited,always choose those projects with the highest net present value (NPV).
• D)If the difference between the present cost of an investment and the present value (PV)of its benefits after a fixed number of years is positive the investment should be taken,otherwise it should be rejected.
• E)If the NPV is positive and the initial investment will be recovered within a certain time period,the investment should be taken.

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