A project with an NPV of zero ______________.
A) Should be rejected.
B) Has a profitability index that is greater than one.
C) Is expected to earn a return equal to the firm's required return.
D) Has a discounted payback period that is shorter than the life of the project.
E) Should be accepted even if the firm has alternative investments with a positive NPV.

Question

Quizplus · Accepted Answer

A project with a Net Present Value (NPV) of zero indicates that the project is expected to generate a return exactly equal to the discount rate (or the firm's required rate of return). This means the project's earnings are anticipated to cover its costs and the required return, but it does not necessarily create additional value beyond that.

A Project with an NPV of Zero ______________