If net present value of a project is greater than zero, the firm will earn a return greater than its costof capital. Such a project should enhance the wealth of the firm's owners.

Question

Quizplus · Accepted Answer

A positive net present value indicates that the project's expected cash inflows exceed its expected cash outflows, which means that the project generates more cash than it costs. This implies that the project will earn a return greater than the cost of capital, and will enhance the wealth of the firm's owners.

If Net Present Value of a Project Is Greater Than