The Net Present Value Rule States to Accept a Project

question 71

True/False

The Net Present Value rule states to accept a project if its net present value (NPV)is greater than zero.

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Definitions:

Hurdle Rate

The minimum rate of return on a project or investment required by a manager or investor to proceed with the project.

Payback Period

The length of time required to recover the cost of an investment.

Economic Life

The estimated period over which an asset is expected to be economically useful to the owner.

Cost of Capital

The rate of return a company must earn on its investment projects to maintain its market value and attract funds.