Project Sigma Requires an Investment of $1 Million and Has

question 76

Multiple Choice

Project Sigma requires an investment of $1 million and has a NPV of $10. Project Delta requires an investment of $500,000 and has a NPV of $150,000. The projects involve unrelated new product lines. The firm can raise unlimited amounts of capital.

• A) Both projects should be accepted because they have positive NPV's.
• B) Neither project should be accepted because they might compete with one another.
• C) Only project Delta should be accepted. Alpha's NPV is too low for the investment.
• D) The company should look at other investment criteria, not just NPV.

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