A Project Is Accepted Under the Net Present Value Method

question 170

Multiple Choice

A project is accepted under the net present value method when

• A)the net present value is zero or negative.
• B)the total amount of cash inflows exceeds the purchase price of the asset.
• C)the purchase price of the asset is less than the present value of net cash inflows.
• D)the present value of net cash inflows exceeds a predetermined minimum amount.

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Definitions:

Sufficient Funds

Refers to having enough money or resources to cover all necessary expenses or investments.

Long-Term Debt

Financial obligations of a company that are due more than one year in the future, often used to finance investments or operations.

Dividends

Distributions from a corporation to its share members, usually utilizing the firm's accrued profits.

Stockholders

Individuals or entities that own shares in a corporation and thereby have potential voting rights and a claim to profits.