Under the net present value method, a project is normally accepted when its NPV is:
Correct answer: D. Greater than or equal to zero
- A. Less than zero
- B. Equal to its initial cost
- C. Greater than its accounting profit
- D. Greater than or equal to zero
Explanation
An NPV of zero means the project earns exactly the required return, while a positive NPV adds value to the firm. A negative NPV indicates that the project fails to cover the required return.
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